Rev. 582 FIELD OPERATIONS HANDBOOK - 6/29/90

Chapter 15

DAVIS-BACON AND RELATED ACT’S AND CONTRACT WORK HOURS AND SAIXTY STANDARDS ACT

Table of Contents

15a GENERAL AND STATUTORY PROVISIONS - DBRA/CWHSSA

:gE Purpose yd use of FOH Chapter 15. The DavmBawn Act.

15aO2 The Related Acts. 15aO3 The Contract Work Hours and Safety Standards Act. 15ao4 The Copehd “Anti-Kickback” Act. 15aOS The Miller Act.

2% DAVIS-BACON AND RELATED ACI’S @BRA)

15boo Coverage - General. 15bol csqraphical scope. 15bO2 Statute of Iimitations. 15bO3 Definition of public building or public work. lSbO4 Site of the work - definition. 15bO5 “Force account” construction work. 1!%06 Lease arrangements. lsbo7 Post Exchange contracts.

1% EXCLUSIONS FROM COVERAGE UNDER DBRA

1ScOO Exceptions to coverage. 15cOO Waivers.

15d INTERPRETATIONS - APPLICATION OF DBRA TO TYPES OF WORK AND coNTRAci3

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Carpet laying and installation of draperies. Clean-up work. Demolition work in relation to construction. Drilling work in various situations. landscape contracting. Painting and decorating. Public utility installation. Sewer Repair Service. Shipbuilding, alteration, repair, and maintenance. Steam and sandblast cleaning. Supply and installation contracts.

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1st INTEFU’FUZI’A‘I’IONS - APPLKA’IION OF DBRA TO TYPES OF EMPLOYEES

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Definition bf laborers and mechanics. Appreatices. Trainees. summer Youth employment. Helpers. Air balance engineers. Architects and engineers. Comfict labor. Dredge workers. Flaggers and traffic directors. Guards and watchmen. Helicopter pilots. Housing authority employees. lnqectors. Managerial and professional employees. Materialmen and Suppliers. Owner-operators of truck and other hauling equipment. Rehive5. Repairmen - tire repair companies and heavy equipment dealers. survey crews. Timekeepers. Truck drivers. Tugboat operators, tugmasters, captains and deckhands. Volunteers.

15f APF’LICATION OF PREVAILJNG WAGE AND FRINGE BENEFIT REQ-

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contract clausu. Prekling wage rates and fringe benefits. Wage determinations. Use and effectiveness of wage determinations. Payrolls and reporting requirements. Area practice - dete mining proper classifzations of various work and type of

construction. Discharging MW and FB obligations under DBRA salaried employee& Hourly paid employees. Piece rate employees. Crediting of fringe benefit payments. Computing hourly fringe benefit equivalents. Eligibility stamiarcis for participation in fringe benefit plans. Pension and profit sharing plans. Vacation and sick leave plans. Holiday pay. Crediting apprentice training costs.

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15fl7 Administrative expenss - binge benefit plans. lSfl8 ,,Transportation and board and lodging expenses. 15fl9 OT payments not required by DBRk

1% CONTIUCT WORK HOURS AND SAFEIY STANDARDS ACT - CWHSSA

lwo Scope of CWHSSA 0wuage - General. w!sJl Method of procurem ent of contracts not controIIing. m@ Failure to include CWHSSA stipulations in uxttract. m@ Site of work. l%W Statute of Iimitations.

l.3 INTERPRETATIONS - APPLICATION OF CWHSSA TO TYPES OF WORK AND comm

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Concessionaire contracts. Contracts with States and political subdivisions. Food services. Hotels, motels, and restaurants - contracts for lodging and meals. Janitorial service contracts. Iaundry and dry deaning contracts; Iinen suppiy contracts. Maintenance work done under service contracts with HUD. Moving and storage. Repair and sewicing of vehicies. Shipbuikiing, aiteration, repair, and maintenance. Sorting and handhng of mail. Vending machine concession agreements.

15i EXCLUSIONS AND EXEMITIONS UNDER CWHSSA

15iOO bmptions. 15iOl Appiication of exclusions and exemptions under CWHSSA lSiCJ2 Limited exemptions, variations, and tolerances.

15j INTERPRETATIONS - APPLICATION OF CWHSSA TO TYPES OF EMPLOYEES

15jOO Employees covered: laborers and mechanics - statutory definition. lSjO1 Flight insmlctors. lSjO2 Medical and hospital occupations. 15jO3 Pilots and copilots of fixed-wing and rotaty-wing aircraft. lSjO4 Supewisory, professional, and clerical personnel.

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l!% APPLICATION OF OVERTIME STANDARDS UNDER CWHSM

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Daily and kkekly OT standards. Basic rate of pay. ‘calendar day” and %bo&d@. Hours worked. Computation of OT when other premium payments are invoh&. Computation of OT under CWHSSA when wage rate is higher than that required

under DBRA or SCA Computation of OT when fringe benefit are im&ed. FLSA OT exemptions and CWHSSA FLSA Set 7(f) plans and CWHSSA Use of the fluctuating w/w under CWHSSA Computing liquidated damages under CWHSSA

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chapter 15

DAVIS-BACON AND RELATED ACTS AND

CONTRACT’ WORK HOURS AND SAFETY STANDARDS ACI’

l5a GENERAL AND STATUTORY PROVISIONS - DBWCWHSSA

15aClO hmose and use of FOI+ ChaWr 15.

(a) This Chapter supplements Regs, 29 CFR Parts 1, 3, 5, 6, and 7, pertaining to a group of statutes genera& identi8ed as the Davis-Bacon and Related Acts (DBRA) and the Contract Work Hours and Safety Standards Act (CWHSSA). The Related Acts are listed in Reg 1. Appendix A, and Reg 5.1. The Davis-Bacon Act, the Copeiand Anti-Kickback Act, the Contract Work Hours and Safety Standards Act, and Regs 1,3, 5,6, and 7 are wmained in FOH Vol. I.

00 Under Reorganization Plan No. 14 of 1950 (64 Stat. 1267) the Federal contracting or other administering agency has the primary rcspons~bility for the enforcement of the DBRACWHSSA labor standards provisions included in its amracts. The Secretary of Labor (S/L) has coordination and oversight responstbilities, including the authority to investigate labor standards wmphance as warranted. Pursuant to the authority under the Plan, the S/L has issued the Regs in (a) to coordinate the administration and enforcement of DBRACWHSSA labor standards. All Agency Memorandum No. 76, dated S/31/68 (FOH VOL I), to Agencies Administering Statutes Referred to in 29 CFR, Subtitle A, Part 5, reflected an agreement between the DOL and the contracting agencies for administering the labor standards of DBRA/CWHSSA Memoranda Nos. 118 and 129 were subsequentiy issued to remind ah contracting agencies of their labor standards enforcement rcspons~~ties.

(c) Pursuant to an understanding with the Treasury Department, the S/L is solely responsible for the enforcement of the DBRA labor standards applicable to covered projects funded under the State and Local F-1 Assistance Act of 1972 (Revenue-Sharing).

15aOl The Davis-Bacon Act.

This Act applies to contracts in excess of $2,000 for the construction, alteration, and/or repair of public buildings or public works, including painting and decorating, where the United States or the District of Columbia is a direct party to the wntract. The Act requires all contractors and subwntractors to pay the various classes of laborers and mechanics employed on the wntract the wage rates and fringe benefits determined by the S/L to be prevailing for corresponding classes of employees engaged on similar projects in the locality. In addition, the Act requires that certain labor standards provisions be specified in the contract awarded to the sucwrsful bidder (see section 55 (a) of Regs Part 5). An applicable wage determination must also be included in the contract documents.

1SaOZ The Related Acts.

‘I&se are Federal statutes which authorize Federal assistance in the form of wntriiutions, grants, loans, insurance, or guarantees for programs such as the construction of hospitals, housing

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complexes, sewage treatment plants, highways, and airports. Included in the language of these statutes are references to the D-B labor standards provisions and the requirement that laborers and mechanics be paid prexGling wage rates. Since Congress is wntinually enacting and amending legislation, the list of the DBRA’s in the Regs may not be completely up to date. Consequently, it may be ncctss~~y to consult the RO for veriftcation of DBRA coverage.

The Contract Work Hours and Safety Standards Act (CWHSSA). . .

This Act ~~~tairrs wbckfy (after 40) OT pay requirements and applies to most Federal contracts which may require or b&e the empbyment of laborers or mechanics, including watchmen and guards, and to which any agency or iustnrmentality of the Uuited States or the District of Columbia or a Territory is a party. (see FOH 1Sg.) NOTE: Work performed prior to l/1/86 on ~dracts covered by CWHSSA is subject to time and one-half OT pay for all hours worked on ~wntractsinacessof8inaolendarday~40per~~whichever~Ster. CWHSSA was amended by Public Law 99-145 effective l/l/%5 to &nitrate the e OT provisions.

&ttracts for construction in excess of $2,000, contracts for supplies between 2,500 and $10,000, andotherwntracts,suchasforservicesinncessofS2J00,arecovmdbyCWHSSk ~his~ct a]so exterztds to Federally-assisted wntracts subject to DBRA wage standards to which the Federal government is not a direct party, except where the Federal assistance is only in the nature of a loanguaranteeoriusuran~

Contracts exempt from this Act are discussed in FOH 15.

Sec. 102 of CWHSSA requires that Laborers and mechanics employed on covered contracts be paid not less thau one and one-half times their basic rate of pay for hours worked in excess of forty in a w/w (or, in excess of 8 hours in a calendar day on contract work prior to l/l/86, if the number of such hours exceeds the hours over 40). It also provides for Liquidated damages in the sum of $10 for tach calendar day (with respect to each employee employed in violation) on which an employee was required or permitted to work overtime hours without the payment of OT wages requiredbycwH!sA

Section 107 of the Act provides health and safety standards on covered construction work which are administered by OSHA

The CoDeland “Anti-Kickback” Act.

The “Anti-Kickback” section of the copeland Act makes it punishable by a fine up to sS,OOO or by itnprisomneut up to 5 years, or both, to induce any person working on a Federally-funded or assisted wusmtction project to “give up any part of the compensation to which he is entitled umier his contract of employment”. (see l Artti-Kickback” Act, Copeland Act, WH Publication m7, and Reg 3, FOH Vol. L)

~@t&~ pertaining to Copeland Act payroll deductions are wntained in Reg 3. Deductions permissible without application for approval by the S/L are explained in Re, 35; those which require appd arc uplaincd in Reg 3.6. Note in Reg 35 that certain deductiom, including &o~e whit& meet the requirements of FLSA Set 3(m), Reg 531, can be made without the wnsent of he sh. The Cqdaml Act and Reg 33 and 3.4 require the contractor or subcontmctor to file a weekly Statement of Compliance”. Reg 55(a) (3) (ii) requires, as a contract stipulation, that

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the contractor submit weekly to the wntracting agency a wpy of all payrolls, along with a weekly “Statement of Compliance”. Contractors may use Optional Form WH-347, available at the ’ Government Printing 05ce at a nominal price, for this purpose.

The willful falsification of a payroll report or “Statement of Compliance” may subject the employer to civil or crimbal prosecution under section 1001 of Title 18 an& section 231 of Title 31 of the USC and may also be a cause for debarment.

The “Anti-Kickback? provision applies to any Federally-funded or assisted construction contract aaxpt wntracts for which the only assistance is a loan guarantee. This provision applies even where the contract is not covered by a labor standards statute. Reg 3, as explained above, applies only to payroll deductions made under contracts subject to Federal wage standards.

The Miller Act (40 U.S.C. 27&+27(Ikj).

This Act provides, in general, that Federal contracts in excess of S25,CKIO for construction, alteration, or repair of any public building or public work of the United States, may not be awarded to any person, until such person furnishes to the United States a bond with a surety satisfactory to the contracting officer for the protection of ah persons supplying labor and material inthep- tion of the work provided for in the contract.

The Department of Labor exercises no functions under the Miller Act, but the information in this section is pertinent since the Act provides protection to laborers and mechanics, and its application is coextensive with the D-B Act, except for the SZS,ooO threshold. in order to protect their rights under this Act, employees of prime contractors or East tier subcontractors must give written notice by registered mail to the prime contractor of failure to receive proper wages within 90 days of the date of performance of the last labor by the underpaid worker. Employees of lower tier sub-subcontractors are not protected by the Act.

Suits to recover under the Milier Act must be wmmenced within one year after the date on which the last of the labor was performed and must be brought in the name of the United States, for the use of the person suing, in the United States District Court for any district in which the contract was to be performed and executed. Suit is brought and prosecuted by the worker’s own attorney. Although the Miller AEt does not apply to Federally-assisted projects (i.e., the Related Acts), many States and grant programs require surety bonds with substantially sin&r requirements.

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(a)

DAVIS-BACON AND RELATED ACTS @BRA)

Coverape - General.

Coverage is extended to construction wntracts awarded directly by the Federal government or financially as&ted under any statute referencing D-B labor standards, including but not limited to those listed in Regs Parts 1 and 5. However, if a statute authorizes assistance but does mt include either directly or by reference the D-B labor standards clause, the DBRA does oat apply. (see (b) below).

In situations where a project is funded under a number of Federal statutes, DBRA applies to the project if any one of the statutes authorizing a portion of the fharhal assistance requires payment of D-B wages.

The DBRA applies to construction projects hanced through the use of revenue-sharing monies under the State and Local Fscal Asshnce Act of 1972, if 25 percent or more of the cost of the project is derived from that statute. If monies from that statute are supplemented by funds from another Federal statute which contains D-B labor standards to finance a particular project, the DBRA applies regardless of the amount of revenue sharing funds involved.

The SurEace Transportation As&ance Act of 1982 (Pub. L.‘97&4), effective January 6, 1983, expaded D-B coverage to all Federal-aid highway construction projects to iuclude those involving resurfacing, restoration, rehabilitation, and reconstruction (“4-R” work). Previously, Section 113 of Title 23, U.S.C., The Federal-Aid Highway Act, had been construed to exclude 4-R work from “initial construction.”

The $2,000 threshold for coverage pertains to the amount of the prime contract, not to the amount of individual subcontracts. If the prime contract exceeds $2,ooO, all work on the project is covered.

!?I-SDhid SW.

ThescopeoftheD-Bislimited,byitstenns,tothefifty~tesand~DistrictofColumbia. The scopeofeachoftherelatedActsis&terminedbythetermsof~particular~~~underwhichthe Federal ass&xxx is provided. For example, DBRA would apply to a construction contract funded undertheHousingandCommum ‘ty Development Act of 1974 located in Guam or the Virgin Islands. However, althn@ direct D-B would not apply in places such as Guam or the Virgin Islands, CWHSSA would apply. (& FOH 15gOO.)

statute of Lilnitatioll$

l’be Portal-&Portal Act (PA) applies to the D-B An It prevents the commencemenofanywurtsuit for unpaid straigh-time wages more than 2 years after performance ofthework(3yeafiincaseof willful violations), where such actions are judicially determhd to be permissible under the law. However, it is the Department’s position that the PA does not apply to adminhative actions initiated ~~~~AUhcaringprocedures,a9dthus,~PAdoesnotprecludesuchcorrectivc . . admmsmtive action after two (or three) years.

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FailuretopaytheminimlrmratesspecifiedinaD-Bcontractisabreachofthecontract,and~ wntracting agency may withhold funds s&icient to pay the unpaid employees. Such funds may be witbheld from the contractor without regard to the statute of limitations in the PA and may be transferred to the Comptroller General and paid to the underpaid employee without regard to such time limit.

The PA does not aiply to Federally-a&ted projects (the Related Acts) on which D-B wage rates are required to be paid. The various State statutes of limitations would apply to such projects in private actions where they are judicially determined to be permissible umier the law. The federal six-year statute of limitations would apply in government enforcement actions (28 U.S.C. 2415(a)).

Definition of bublic building or bublic work.

The term “public building” or “public work” inch&s building or work, the construction, prosecution, completion, or repair of which is carried on directly by authority of or with funds of a Federal agency to serve the interest of the general public regardless of whether title thereof is in a Federal agency. see Reg 5-w.

Site of the work - definition.

The D-B Act provides that every covered contract shall contain a stipulation that the wntractor or subcontractor shall pay all mechanics and laboxrs “employed directly upon the site of the work” at wage rates not less than those stated in the advertised specZcations. The Related Acts which provide for Federal wnstruction as&ance contain 1~) reference to “site of tbe work”. However, Reg 5.5 (a)(l)(i) prescribes a wntract clause which in effect extends the “site of the work” wncept to the. related statutes. The United States Housing Act of 1937 and the Housing Act of 1949, however, specifically require payment of not less than the wage rates prescribed to all mechanics and laborers employed “in the construction and development of the project”. In shoq there is no “site of the work” wncept with respect to the United States Housing Act of 1937 or the Housing Act of 1949. (It should be noted that the OT requirements of CWHSSA apply to all laborers and mechanics performing wntract work, regardless of the site of their employment. & FOH l5gO3.)

The D-B Act limits merage to laborers or mechanics employed on the “site of work” but does mt definethisterm. Tbc”siteofwork”&~~statedbelowshallbefollowedbywHin~ D-B and DBRA investigations:

(1) The ‘site of work” is limited to the physical place or places where the wnstruction called for in the wntract will remain when work on it has been completed and, as discus& in paragraph (2) below, other adjacent or nearby property used by the wntractor or subcontractor in such wnstruction which can reasonably be said to be included in the ‘site” because of proximity. For example, if a small office building is being erected, the ‘site of work” will normally include no morcthanthebuildingitstlf~itsgroundsandotherland~strucaues”&~~block”or ‘across the street’ which the contractor or mCtOruseSillthe-OfhiSperformanceOll

ttlepartiwlarwntran hthecaaeoflarger~, suchas~ahportaordams,the’aiteof thework”is oecessarilymoreextensiveandincludesthewholeareainwhich~w~ct wnstnxtion activity will take place.

(2) E;xcept aa provided in paragraph (3) below, ffbrication plants, “mobile factories” batch plants, borrow pits, job headquarters, tool yards, etc., are par& of the “site of work” provided tbey are dedicated exchxsively or nearly so to performance of the wntract or project, and are so located in

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proximity to the actual construction location that it would be reasonable to include them. A judgmentmustbemadeonaUtbef&s~circumstances oftheparticularcaseandtheviewsof the wntracting officer should be taken into account.

Not included in the ‘site of work” are permanent home offices, branch plant establishments, fabrication plants, and tool yards of a wntractor or subcontractor whose locations and wntinuance in operation are determined wholly without regard to a particular Federal or federally-a&ted contract or project. This is so even though mechanics and laborers working at such an establishment may repair or maintain machinery used in contract performance, or make doors, windows, fkames, or forms called for by the wntract while continuing mrmal commercial work. Regardless of the activities performed at such establishments, the wage determination does not apply because they do not wnstitute the “site of work”. In addition, fabrication plants, batch plants, borrow pits, job head-, tool yards, etc., of a commercial mlier or platerialman which are established by a supplier of materials for the project before or~ni~ of bi& and not on the project site are not included in the “site of work”. such permane& previously established fMities are not a part of the “site of work”, even where the operations for a period of time may be dedicated exclusively, or nearly so, to the performance of a contract. (see F&g 5.2(l) and FOH lSe15.) On the other hand, if mechanics or laborers working at such establishments that are not a part of the “site of work” are required to go to a place which is the “site of work” to perform activities on the wntract there, the WD is applicable for the actual time so spent at the site of work not including travel.

(c) Once the limits of “site of work” have been determined, the wage determination is applicable only to those mechanics and laborers employed by a contractor or subcontractor within such limits (that is, upon the site of the work).

(d) Earlier, guidance was provided that any investigations of contractors/subcontractors on a Davis-Bacon project, who had employees employed as truck drivers hauling materiaWsupplies from commercial suppliers to the worksite, should be suspended until further notice. On May 4,1992, an Interim Final Rule was published, effective that date, implementing the “Midway” decision. This rule is applicable to “all pending cases.” As a result, the suspension was lifted. Guidance regarding such investigations is provided as follows:

(1) Our traditional enforcement position regarding employees of materialmen is not affected a FOH lSel.5).

(2) Time spent by employees engaged in transporting materials/supplies to and tiom the site is a covered.

(3) The spent on the site loading or unloading materials/supplies & covered.

(4) Tii spent driving on the site b covered.

(5) Time spent hauling on a dedicated facility and between a dedicated facility and the site & wvered.

(6) The spent driving between two or more unrelated sites is m covered.

(7) Time spent by such employees performing any other activity pn tbe si$ as a laborer or mechanic & wvered.

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In some instams a Government agency (or a State or political subdivision thereof using Federal money) may perform wnstruction work under what is generally known as “force account”. In essence, this is a “do-it-yourseW type of comction - the governmental agency receiving the grant decides not to congact out the work but actually performs it “in-house” with its own employees. Such work is not generally subject ot DBRAKWHSSA because governmental agencies and States or their pOlitical subdivisions are not considered ‘wntractors” or “subcontractors” within the meaning of the D-B Act. However, any part of the work not done under “force account” but wntracted out is subject to DBWCWHSSA in the usual manner. (see FOH lSe12.)

Certain related acts require payment of prevailing wages to all laborers and mechanics “employed in the wnstruction (or development ) of the project” (e.g., the U.S. Housing Act of 1937 and the Housing Act of 1949). State and local government agencies receiving Federal ashtame under statutes containing this or similar wording not restricting coverage to employees of contractors or subwntractors, which perform wnstruction with theii own employees, must pay such employees acwrding to DBFWCWHSSA.

Lease arraneements.

Where the Government enters into a lease/purchase agreement D-B applies, because the cost of the construction is eventually paid for by the Government D-B also applies to a lease option or to a term lease agreement where there is substantial and segregable construction activity, and where the structure is a public building or public work This may be true, for example, where the building is built at the request of the Government p ursuant to Government specifications for Government useorpurposefw the period of the lease.

Postal Service lease agreements are govemed by the Postal Reorganization Act (39 U.S.C. 410(d)). Under the terms of that Act, Postal Service lease agreements for rent of net interior space in excess of 6,500 square feet are required to inch& DB labor standards for any construction, modification, alteration, repair, painting, decoration, or other improvement of the facility covered by the agreement

Post exchanze contra-.

The D-B Act applies to Post Excbaqe contracts for wnstr&on, alteration or repair of build@& regardless of whether such contracts are paid for with appropriated or nonappropriated funds.

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I.& EXCLUSIONS FROM COVERAGE UNDER DBRA

l5cMl bX%DtiODS to coverafze.

(a) Section 4 of the D-B provides that “this Act shah not be construed to supersede or impair any authority otherwise granted by Federal law to provide for the establishment of specific wage rates”. ,,Thus, for example:

(1) If a railroad undertakes to perform a contract normaI& subject to DBRA, coverage is not extended to employees of raihoad common carriers if they are covered by the Railway Labor Act. Howcvtr, if the tailmad contracts out such construction work, laborers and mechanics employed by contractors or subcontractors are covered.

(2) While the D-B Act contains no express exemption for common carriers, coverage is not extended to common carriers who are hauling over regularly scheduled routes in accordance with published tariff rates and pursuant to a bill of lading. On the other hand, transportation of materials from an exclusive borrow pit to fiEll the specific needs of a construction contract would not normally be within the wmmon carrier exception since such transportation is not nonnahy carried out over a regularIy scheduled route in accordance with published tariff rates and pursuant to a bill of lading.

(b) Under the terms of certain authorizing statutes, DBRA does not apply to wnstruction of less than a designated number of housing units. For example:

(1) Title I of the Housing and Community Development Act of 1974 - rehabilitation of residential property designed for fewer than 8 families.

(2) Section 802 of the Housing and Community Development Act of 1974 - construction of residential property designed for fewer than 8 famihes.

(3) Section 8 of the U.S. Housing Act of 1937 - fewer than 9 units.

(4) Sections 220 and 233 of the National Housing Act - fewer than 12 units.

(5) Sections 221 and 235(j) (1) of the National Housing Act - fewer than 8 tamilies.

(c) Section 14 of the United States Housing Act of 1937 established the Comprehensive Improvement Assistance Program (CIAP), under which HUD provides financial assistance to public housing agencies for improvement of existing public housing projects and upgrading of the management and operation of such projects. Section 12 of that Act sets forth the labor standards which must be contained in any contract for loans, annual wntriiutions, sale or leases pursuant to the Act, and provides that (1) all laborers and mechanics employed in the deveionment of a CLAP-funded lower income housing project be paid DBRA wages, and (2) ah maintenance laborers and mechanics employed in the oneration of such a project he paid wages prevailing in the Iocaiity as established by HUD. while most CLAP-funded work items are developmental for purposes of prevailing wage rate determinations and are, therefore subject to DBRA, certain work items

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(“non-routine maintenance”, formerly referred to by HUD as “major repairs”), in addition to routine maintenance, are recognized as operational which are subject to HUDdetetmined (nat DBRA) ratu. HUD has issued guidance to its field offices and public housing agencies (and Reg, 24 CFR 96S3), which distinguishes work items subject to HUD-determined or to DBRA prmaihg wages. In essence, repair or replacement necessitated by normal wear and tear over time is to be considered operational and outside the coverage opDBRA, provided that the work is not so substantial as to constitute reconstruction. Thus, conversion of equipment or prom& and replacement or alteration of property which results in betterment and itwok significant . B a&vi@ is subject to DBRA Any questions on the proper classification of particular woriritelnssubjecttoDBRAunderCIAPwhicbcannotbe~~]~withHUDshallbe referred though &am& to the NO. WH doa not enforce HUDdetermined wage rates under CIAP.

Construction projects administered by the Farmers Home Administration and funded under the Community Facility Program of the Farm and Rural Development Act of 1972 or under section 515, Title V of the Housing Act of 1949, as amended by the Housing and Community Development Act of 1974, do not contain D-B labor standards and are not covered if there is no other federal assistance containing D-B labor standards.

Projects solely funded under the Land and Water Qnservation Fund Act of 1965 or under the Colorado River Basin Project Act are not covered.

Waivers of coverape.

DOL does not have the authority to grant waivets from D-B coverage of a contract to which the Government is a direct party or from a Federaily assisted (ii DBRA) contract. However, in some cases, the particular DBRA statute funding the project may specifically provide for a waiver or an exemption by the administering agency from the provisions of the Davis-Bacon Act.

Pursuant to authority under section 107(d)(2) of the Housing and Community Dewelopment Act of 1974, as amended (42 USC 5301 et seq.), the Secretary of HUD has waived the DBKWHSSA labor standards requirements in connection with cOmmunity Development Block Grants for Indian Trii and Alaskan Native villages (24 CFR 571.603).

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INTERPRETATIONS - APPLICATION OF DBFU TO TYPES OF WORK AND CONTRACTS

Carnet lavin~ and installation of draueries.

DBRA applies to carpet laying and the installation of draperies when it is performed as an integral part of or in conjunction with new wnstruction, alteratioh, or reconstruction. The SCA applies ,$I carpet laying when it is performed as a part of routine maintenance, e.g., replacement of worn out carpeting in a public building or a public work where no other wnstruction is contemplated.

Clean-UD work.

Cleaning work is wvered by the DBRA in situations where the cleaning is performed as a condition precedent to the acwptance of a building as satisfactorily completed. For example, this would include activities such as window scraping and washing, removal of exwss paint, and sweeping. Where cleaning is carried out after the construction contractor and subcontractors have finished their work, left the site, and the contracting agency has accepted the project as completed, such work would not be considered a part of the ‘wnstruction” and would not be covered under DBRA (However, SCA may apply in the latter situation if there is a direct contract with the Federal Government.)

Particular attention should be given to local area practices when assessing BWs for clean-up work. In some localities, the area practiw is for some classification other than wnstruction laborers to perform the clean-up work. Where applicable, wnfonuance procedures (Reg 55(a)(l)(ii)) may be appropriate. Guidance should be obtained from the RO or NO, if necessary.

Demolition work in relation to construction.

Demolition, standing alone, (except for demolition work under Urban Renewal ptojects authorized pursuant to the Housing Act of 1949, as amended) is not subject to the prevailing wage requirements of DBRA For example, the demolition of a building because such structure is no longer needed would not in itself be a wvered construction activity. However, where an .existing building is being demolished and further construction activity at the site is contemplated that is subject to DBRA, DBRA would apply to such demolition, such as demolition performed to permit wnstruction of a new building or highway.

DrillinP work in various situations.

The application of the Act to a wntract for drilling work would turn upon whether the contract is one for “construction” of “public works” within the meaning of the Act.

Exnloratorv drilling.

Drilling, like excavating generally, is usually considered “wnstruction” activity. The critical question is whether the holes which would be dug during the course of the exploratory drilling would be “work” within the statutory term “public work”. The word “works” in the term “public work” refers typically to improvements, such as buildings, canals, or roads, rather than mere progress or activity. Consequently, exploratory drilling for the purpose of obtaining data to be used in engineering studies and the planning of a project such as a dam and reservoir, the actual

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wnstruction of which has not been authorized nor funds appropriated, would not be within the term ‘Evork” because it relates to an activity as distinguished from a project or improvemeni Also, the holes themselves, which are opened to obtain cores and which are subsequently to be Clled in or abandoned, would not be ‘tvork” because they are not improvements. The products sought by the digging are the cores of the earth and not the holes themselves. (See also FOH 14bO3.) In contrast, wells drilled to obtain a water supply for a military base or a contract for digging of test hoi? which later may become ‘public work’ or permit wrnxrsion to water wells, oil wcilq or other >ublic work9 are cove&.

. (cl Soil boring orior to or durine construction for the ~umose of settine foundations.

(d)

Soil boring contracts arc considered covered by the DBRA if they are direct& related and incidental to, or an integral part o& the actual wnsttuction process. This is to be distinguished from the situation where such wntracts are for the formulation of engineering plans and speci6cations, designs, and the wnduct of site investigations. The latter activities are regarded as prehmiuary work, and not as a part of the wnstruction process. (Also ggg FOH 14bO4.)

Plueeine of oil or pas wells.

A amtract which calls for the plugging of oil or gas wells and the removal of above-ground equipment in wnnection with the construction of a reservoir on land wntaining such wells would be covered by the DBRA no matter whether the work is character&d as demolition (the dismantling of the above-ground equipment), incidental to wnstruction, or well drilling (the renmning of the tubing and replacement of the cement plugs).

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Landscane contracting.

Landscaping performed in conjunction with new wnstruction or renovation work subject to DBRA is cover4 in addition, elaborate landscaping activities standing alone such as substantial earth moving and rearrangemeut of the terra& e.g., strip mine reclamation, may constitute construction within the meaning of the D-B Act, without any requirement that it be related to other wnstruction work (Reg 5.2(i)). Landscaping which is not covered by the D-B Act is work to which the SCA may be applicable. (see Reg 4.116.)

W Particular attention should be given to local area practices when assessing BWs for landscape work. In some localities, the area practice is for some classification other than wnstruction laborers to perform landscape work (e.g., “landscape laborer”). Where applicable, conformance procedures (Reg 55(a)(l)@)) may be appropriate. Guidance should be obtained from the RO or NO, if neccsary.

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Paintine and decorating.

DBRA applies to the “construction, alteration, and /or repair, including painting and decorating, of public buildings or public works. DBRA coverage has been extended to the painting or f@.ding of mail collection boxes, street and traffic lines, the refinishing of floors and bowling lances, and the installation of w&l covering or hanging wallpaper.~ Federal contracts for painting Of ~mtnent-owned, privateiy occupied houses, apartments, commercial properties, etc., are also covered by the DBRA

‘ Public utilitv installation.

Whether or not the employees of a public utility, who perform construction-type work in co~tction with Federal and federal&assisted projects, are wvered by the DBRA will depend upon the nature of the contracts involved and the work performed therewxier.

Where a public utility is furnishing its own materials and is in effect extending its own utihty system, such work is not subject to DBRk The same conclusion would apply where the utility company may contract out such work for extending its utility system. However, where the utility company agrees to undertake a portion of the construction of a covered project (e.g., relocation of utility lines or installation of utility lines which are to become the property of the project sponsor), such work would be subject to the DBRA labor standards requirements of the construction contract

For example, DBRA wage provisions of the United States Housing Act do not apply to a contract between a local Housing Authority and a city water department under which the department installs water mains in streets adjacent to a housing project; co~ects mains and meters to the project’s plumbing; furnishes water to the project; and operates and maintains such mains and meters without expense to the Authority beyond an initial setice charge, since the city is engaged essentially in the extension of its water distribution system rather than in the development of the Proje

Also, employees of a telephone company engaged in the installation of ordinary telephone fhcilities for a Government facility under construction are engaged essentially in the extension of the telephone company’s system rather than in Government wnstruction, and, therefore, are not covered by the D-B Act. However, removal and relocation of telephone lines at the sole option of the Government to eliminate interference of the lines with construction at the uroiect site is construction work wvered by the D-B Act.

Sewer renair service.

The &et-ml inspection of sewer lines for leakage and damage through the use of closed circuit T.V. inspection and the simultaneous sealing of leaks or other damage in the lines as the machine inspects the sewer line is covered by DBRk On the other hand, if the contract is only for inspection, DBFW would not apply. However, SCA would apply in the latter situation if the Government was a direct party to the contract.

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When this type of work is an issue in an investigation, an area practice survey (FOH 1SfW) should be conducted to determine which classification, if any, in the applicable wage determination performs this work. In conducting the area practice survey, evidence should be gathered wncerning specific projects where repair work was actually performed. If the sunrcy does not show that a classification in the applicable wage determination has actually performed this type of W& the use of a wnformed classi6cation and rate would be appropriate. (kg SS(a)(l)@).)

Shinbuildine. alter&on. renair. and maintenance.

The building, alteration& repair of ships under Government contract is work performed upon “public work” within the meaning of the Davis-Bacon Act. Wage dctcrminations for shipbuilding under the D-B are issued only if the location of contract performance is htown when bids are solicited. However, a Government contract which calIs for the construction, alteration, furnishing, or equipping of a “naval vessel. (U.S. Navy and U.S. Coast Guard vessels) is subject to PQL A contract which calls for maintenance and /or cl&g, rather than alteration or repair, of a ship or naval vessel is a se&# contract within the meaning of the SCA. (see FOH 13bll and MiO3.)

Steam and sand blast cleaning.

A Government contract requiring steam and sand blast cleaning and bird proofing is covered by the D-B Act. Such cleaning operations performed on public buildings are at&o&d for the purpose of renewing the original appe!arancc of these buildings and are performed for the same purpose as painting and decorating which are covered by the D-B Act.

SUDD~ and installation contracts.

Installation work performed in wnjunction with supply or service (e.g., base support) contracts is covered by the DBRA where it invohtes more than an incidental amount of wnstruction activity (ik the contract wntains specific re@rements for substantial amounts of wnstruction, reconstndon, alteration, or repair work, and such work is physically or functionally separate from and can be performed on a segregated basis from the other nonwnstruction work called for by the contract (see Reg 4.116(c)(2))). For example, D-B coverage has been extended to installing a security system or an intrusion detection system, installing permanent shelying which is attached to a structure, instalIittg air~nditioning ducts, excavating outside cable trenches and laying cable, installing heavy generators, mounting radar antenna, and installing instrumentation grounding systems, where a substantial amount of wnstruction work is involved.

Whether installation work involves more than an incidental amount of construction activity depends upon the specific circumsbncesofcachparticcliarcaseandnofiaedrulescanbe established which would accommodate every fact situation. Factors requiring consideration include the nature of the prime contract work, the type of work performed by the employees installing the equipment on the project site (i.e., the techniques, materials, and equipment used and the skills &led for in its performance), the extent to which structural modifications to buildings are needed to accommodate the equipment (such as widening entrances, relocating walls, or installing wiring), ad the mt of the indlatjon work-either in terms of absolute amount or in dat.iOn to the cost of the eeuinment and the total nroitct cost.

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(c) DBFIA does not apply to construction work which is incidental to the furnishing of supplies or equipment, if the construction work is so merged with nonconstruction work or so fragmented in terms of the locations or time spans of its performance that the construction work is not capable of being segregated as a separate contractual requirement.

(d) Coverage questions which cannot he resoived in accordance withrthe above principles should be directed..to the NO.

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15e WIERPRETATIONS - APPUCATION OF DBRA TO TYPES OF EMPLOYEES

lSeo0 Definition of laborers and mechanics.

The terms “laborer” and “mechanic” are defined in Reg 5.2(m), and generally include workers whose duties are manual or physical in nature as distinguished from mental or managerial, and include apprentices, trainees, and helpers. (In the case of CWHSSA see FOH 15jOO.) The terms do not apply to workers whose duties are primarily administrative, executive, professional, or clerical, rather than~manual (see also FOH lSe14). Generally, mechanics are considered to include any worker who uses tools, or who is performing the work of a trade.

l&01 ADDreDticeS.

(4 An apprentice (Reg 52(n)(l)) is (1) any person employed under a bona fide apprenticeship program registered with a State apprenticeship agency which is recognized by the Bureau of Apprenticeship and Training (BAT), Employment and Training Administration, U.S. Department of Labor or if no such recognized agency exists in a State, under a program registered with the BAT itself, or, (2) a person in the first 90 days of probationary employment as an apprentice in such an approved apprenticeship program, who is not individually registered in the program, but who has been certified by BAT or a State apprenticeship agency (as appropriate) to be eligible for probationary employment as an apprentice. All apprentices other than probationary apprentices must be individually registered in the approved program. Consistent with the level of training in the prow an apprentice will perform for the appropriate period of time all levels of work, from the lowest unskilled laborer’s work to the highest skilled or craft work of the finished mechanic, under the supervision of the journeymen. To be employed in compliance with the Regs the following guidelines must be observed:

(b) Allowable ratio - anprentices to ioumevmen.

(1) The allowable ratio of apprentices to journeymen employed on the contact work in any craft classification shall not be greater than the ratio permitted the contractor as to his entire work force under the registered program. (see Regs 55(a)(4)(i).) The allowable ratio is to be applied on a daily basis. However, BW’s will not be asses& for minor, temporary, and inadvertent ratio imbalances which are promptly corrected. If a contractor has both an apprentice and a trainee program, the trainees must be wunted together with the apprentices in determining compliance with the allowable ratio (i.e., the journeymen may not be counted twice).

(2) For the purpose of illustration only, assume that a contractor is allowed a ratio of one apprentice to every three journeymen under the terms of the approved plan. This same ratio would apply on DBRA covered jobs. Thus, in this example, the allowable number of apprentices is illustrated by the following chart:

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Joumcvmm Aknvable ADDI-CII~~CCS

o-2 0 3-5 1 6-8 2 9-11 3

JVOTE: The titios are applied in terms of whole number increments for the journeymen (as renectedintheprecedingchart)andnatiatnmsof.~nsthe~f:unlcssa different standard is spa&d in the approved plan. Also, the allowable ratio will vaIyhlnplantophn.

Notwithstanding that the DBRA work may be performed in a location other than the place where the program registration was initially made, the allowable ratio is the ratio specified in the wntxactor’s or subcontractor’s registered program (see Reg 55(a)(4)(i)).

A workiug foreman, supervisor, or owner may be counted as a journeyman for ratio purposes provided such a worker spends the majority of his or her time at the site.

In detumining the proper ratios, “bootstrapping” is not allowed. For example, if an employer has unplayees who are misclassified and de&mined to be entitled to the journw’s rate or has utilized an excessive numb of apprentices who are also entitled to the journeyman’s rate, such employees cannot then be counted as “journeyman” for ratio Purposes.

(C) Rezistered aDDEDtiC ratio exceeded.

If a contractor or subcontractor employs apprentices in such a number that the permissible ratio is SFppAed, all apprentices employed in excess of the ratio are considered to have been improperly employed and will be entitled to the rate for the classification of work which they are performing. For example, if an employer is permitted to employ three apprentices under his approved plan and it is disched that he is employing Eve apprentices on the project, the first three apprentices employed on the project shall be considered within the quo-, the last two employed shall be considered improperly employed and BWs are due the two employees. As a practical matter, if it is impossblle to detumine which apprentices were first employed on the project for the proposes of BW computation, any equitable formula will be acceptable. For example, in the preceding situation, it would be permissble and equitable to rotate three of the five apprentices each week as a solution to the problem of which of these employees were “first” employed on the project, and compute the BW’s for the remining two employezs in a manner which distriiutes the BW’s as equally as possible.

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Evidence of bona fide aDDrentiCtZ!ShiD registration.

Reg 55(a)(3)(i) requires that a contractor or subcontractor utilizing apprentices maintain written evidence of the registration of the program and the apprentices, and of the ratios and wage rates prescrii in the applicable programs. The CO should check with the contractor for such written evidence of bona fide apprenticeship if apprentices are employed bn the contract.

Unreeisiered amxentices.

hg 55(a)(4)(i) provides tbat any employee listed on a payroll at an apprentice wage rate who is not a bona fide registered or probationary apprentice shall be paid the wage rate for the classification of work actually performed. However, the fact that a worker is listed on the payrolls as an apprentice in a particular craft and paid an apprentice wage rate for that craft does not, in itself, mean tbat person performed only the work o& or used only the tools of, the craft in which the person is an unregistered apprentice, and it does not mean that the worker must be compensated only at the contract rate for that craft classification. Such an employee may actually be @oxming work as a laborer or in another craft classification, and must receive at least the rate applicable for the classification(s) of work actuaIly performed.

Emulovment of auorentices bv more than one emolover.

Employment of a properly registered apprentice by more than one employer does not affect bis/ber status. The transfer of apprentices from one employer to another to provide varied work and training is an accepted construction industry practice.

Wape commutations for aonrentices.

In some instances, bona fide apprenticeship agreements contain percentages which are applied to a stipulated wage rate (contained in the agreement and established by BAT), the product of which results in the wage rate paid to the apprentice. While such a computation is acceptable on construction projects not subject to the DBRA tbe contractor on covered projects is bound by any hither wage rates in the WD and the percentages should be computed against the journeymen’s basic rate found in the WD. Some apprenticeship agreements may specify dollar amounts, rather than percentages of the journeymen’s rate, for various levels of progress. For this type of apprenticeship training agreement, in order to determine whether the apprentice is properly paid it is necessary to convert the dollar amounts to a percentage of the journeymen’s basic rate in the training agreement. This is then applied to the rate specified in the WD. For example, where the journeymen’s rate contained in the apprenticeship training agreement for a particular craft is S8.00 per hour and the apprentices are to receive S4.00, $5.00, s6.00, or $7.00, depending on their level of progress, the percentages to be applied against the journeymen’s rate in the WD should be SO%, 63%, 75%, and 88% respectively. In addition, the apprentices are also entitled to receive fringe benefits in accordance with the provisions of the apprenticeship program. If the approved program is silent as to fringe benefits, apprentices must be paid the full amount of fringe benefits listed in the WD for their classification, unless the Adm determines that a different practice prev& in the locality of the construction project for that particular apprentice classification.

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Trainees.

Atraineeisanypersonwhois rewiving on-the-job training in a construction occupation under a program which has received prior approval (or prior recognition for certain programs establish& prior to August 20, 1975), as evidenced by formal certification of the approval (or recognition) by the Department’s Employment and Training Administration (BA’P). State apprenticeship agencies have no authority oyer trainee programs. (see Regs 52(n), 5.5(a)(4)@), 5.16, and 5.17.)

A trainee must be paid at the rate speci6ed in the program for his/her level of progress, pressed as a percentage of the journeyman hourly rate speci6ed in the applicable WD. Also, trainees are to be paid the &inge ben&ts stipulated in the trainee program. If the program does not mention fringe bene@ trainees must receive the hinge benefits reflected on the WD for the craft. NOTE: An exception to this rule has been provided in Reg 55(a)(4)(ii)(1983) if the Adrn determines that there is a corresponding apprenticeship program providing for less than full fringe benefits for apprentices in that particular classification, in which case fringe benefits shall be paid trainees in accordance with the corresponding apprenticeship program.

The principles set forth in FOH 15eOl regarding allowable ratio, ratio exceeded, evidence of apprenticeship, unregistered apprentices, employment by more than one employer, and wage computations for apprentices are applicable to trainees.

A amtmztor employing participants under the Comprehensive Employment and Training Act (CET’A) or the Job Training Partnership Act (JTPA, which repealed and replaced CETA) on a DBRA covered contract must pay such individuals the applicable prevaihng wage rate for the &ssification of work performed unless the requirements in Reg 55(a)(4)@) have been met and the particular Wining program has been approved by ETA (BAT); howeve r, JTPA trainees performing construction work funded solehr under JTPA are specifically exempted from DBRA requirelnetlts.

There are a number of ETA on-the-job ttaining programs (for example, WIN) established to train and hire the unemployed. Unless the requirements of the Regs are met, individuals enrolled in such programs must be paid the applicable prevailing wage rate for the classification of work performed on covered work.

The requirements of Reg 55(a)(4)(i) and (ii) do not apply to apprentices and trainets performing on Federal-aid highway construction contracts subject to 23 U.S.C 113 and enrolled in programs certified by the Secretary of DOT, because they are specifically exempted from DBRA by the Federal-Aid Highway Act.

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Summer Youth emtkvment.

Under the guidelines set forth in All Agency Memorandum Nos. 71 and %, DOL will take no exception to the practice of paying less than the predetermined laborer or journeyman’s rate to bona fide students employed on a temporary basis for the summer months only if the employment is part of a bona fide youth opportunity program such as that sp6nsored by union and management or by a governmental or community group. Sponsorship by an individual contractor for only one particular project would not qualify for the exception.

The specific provisions of any such agreement between the contractor and the contracting agency and the rates of pay are to be in writing, and a report of the reclassification is to he submitted to the Adm by the contracting agency.

Helners.

Helpers are permitted on a DBRA contract if the helper classifications are specified in the applicable WD or conformed rates are approved pursuant to Reg 55(a)(l)@). In each case, area practice will determine the allowable duties of helpers and their use is not restricted in a ratio to the number of journeymen employed by the contractor on the job site. It should be note that a request to the NO for a conformed helper wage rate will be approved only where the helper classi6cation in question constitutes a separate and distinct class of worker whose use is prevailing in the area, and whose scope of duties can be differentiated from those of the journeymen. A helper may not be used as an informal apprentice or trainee, and it is not permissible for helpers to use 3ools of the trade” in assisting a journeyman. (Note: As of date of issuance of this FOH position, a regulatory proposal which would substantially revise the policy on helpers is pending.)

Air balance enaineers.

In general, air balance engineers are not considered laborers or mechanics within the meaning of the Davis-Bacon Act. The primary function of such employees is to take measurements and to accumulate data upon which recommendations are based to advise mechanical contractors how to recti& imperfections or imbalances in heating and air conditioning systems which may become apparent after the contractor(s) have installed such systems. Generally, however, such employees do not physically make the required corrections. C however, such employees spend a substantial amount of their time in any worhveek (i.e., more than 20 percent) on the site performing manual, physical, and mechanical functions which are those of traditional craftsmen, they would be considered laborers or mechanics for the time so spent.

Architects and entineers.

~h&ct,s, engineers, technicians, and draftspersons are not covered by DBIW, unless they perform duties as laborers and mechanics and do not meet the tests of Reg 541. (see FOH 15elZ.)

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Convict labor.

While the D-B contains no prohibition against the employment of convict labor, section 4082 of Title 18, USC imposes certain wnditional limitations on the employment of Federal prison inmaks to protect against their exploitation and unfair competition. Similarly, Executive Order 11755 permits the employment of non-Federal prison inmates ux&r work-release programs on Federal contracts under terms and conditions comparable to those applicable to inmates of Feded prisons under 18 USC se&m 4082 The Department of Justice is responsible for adminiztering these.provkions. Questions or complaints pertaining to the above provisions should be direcd to the local US. Attorney3 Offi=

Drexlee workers.

Government contracts for dredging itn&e the wnstruction, alteration, or repair of “public works of the United States”. Workers on a dredge engaged in dredging operations are generally laborers or mechanics subject to the DBRk However, employees engaged as seaman on a dredge or a tugboat are not laborers or mechanics. (see FOH lSeZ2.)

Flayers and traffic directors.

Au Agency Memorandum No. 141(8/l9/85) set forth DBRA coverage of employees engaged as 5ggers on DBRA contracts entered into pursuant to invitations for bids issued or negotiations wncluded as of October l&1985. Prior to that date, such employees were not generally considered to be laborers or mechanics for purposes of DBRA, unless they performed other manual or physical duties as laborera or mechanics in a different classification. On reconsideration, the duties of 5ggers them&yes have been determined to be manual and physical in nature; 5ggers typically work on or around heavy or highway construction projects as part of the wnstruction cfcw; and their work is integrally related and a necessary incident to the other wnstruction activities at the site.

Empkryees of trafxic sewice companies which operate as subcontractors on DBRA projects to set up and service traffic control devices (e.g., barricades, directional signs, lights, armwboards, etc.) are generally covered by DBRA. However, traf5 service wmpanies which rent equipment to the prime wntractor and perform only incidental 5xtions at the site in connection with delivery of the equipment are regarded as a materialma&upplier whose employees would not be subject to DBR& unless particular employees spend a substantial amount of tune (20% or more) in the worhveek on the covered sit or sites. (see FOH lSel5.)

Guards and watchmen whose duties consist solely of watching or guarding are not considered “laborers” or “mechanics” for purposes of DBRA (The rule is different under WSA; %g FOH 1SjOO.) However, if such an employee actually performs physical or manual work on the wnstruction project in addition to or in connection with guarding activities, the employee should be classified as a laborer or mechanic for the time so spent and paid the appropriate WD fate.

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lSel1 Helicobter pilots.

Helicopter pilots are laborers and mechanics for purposes of DBRk (sa FOH lSjO3.)

15el2 Housine. authoritv cmdovee.

The United States Housing Act of 1937 and the Housing Act of 1949 require HUD to set and enforce prevaihng wage rates for architects, technical engineers, draftspersons, and techniciam employed in the development of a project- In addition, maintenance laborers and mechanics employed by a local housing authority to perform routine maintenan~ on property owned by the authority are subject to prevaihng rates established bv HUD. Questions regarding such situations should be refetred to the local HUD office. However, if maintenance laborers and mechanics employed by a housing authority are performing construction work funded by one of the above-mentioned statutes, such work is subject to prevaihng wage standards of the DBRA (see FOH ISbOS and 156)0(c)).

15e13 IMDtXtOK.

Employees who make inspections at a covered construction site to see that the work meets the specifications and requirements of the contract or established standards and codes are not usually considered to be “laborers” or “mechanics” for purposes of DBRA. However, if such workers perform other duties as laborers or mechanics, they must be paid the WD rate for the particular clasScation invohed for the time so spent.

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Manaeetial and urofessional emnlovees.

An individual employed in a bona fide executive, administrative, or professional capacity, as defined in FLEA Reg 541, is not a laborer or mechanic for purposes of DBRA

A supervisory employee who is not exempt under Reg 541 and who spends more than a substantial amount of time (20 percent) in a given w/w as a “laborer” or “mechanic” must be paid the applicable DBRA prevaihng wage rate for the classification of work performed for all hours engaged in such work as a laborer or mechanic. For example, if a nonexempt employee spends 60 percent or 24 hours of a 40 hour w/w performing administrative functions such as preparing time cards, supetvising the project work, and arranging for deliveries and the remaining 40 percent (16 hours) of the time performing the duties of an electrician, the individual must be paid the electrician’s prevailing wage rate for the 16 hours.

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Materialmen and suooliers.

The manufacuue and delivety to the work site of supply items such as sand, gravel, and ready-mixed concrete, when accomplished by bona fide “materialmen” operating facilities serving the public in general, are activities not covered by DBRA. This would be so even though the materials are delivered directly into a contractor’s mixing facilities at the work site. Such bona fide materialmen are not considered contractors under DBRk Thus, their employees are not subject to DBRA labor standards. (See also FOH 1904 and 15e21.1

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(b) A particular facility set up at or near a construction site for the purpose of f&ihing the material requirements of a contract and thus subject to the DBRA initially, may undergo a change in its character to such an extent that it becomes the operation of a “supplier” or “materialman”. This would be so, for example, if it makes a sufficient quantity of sales from its producing facility to the general public. What constitutes a “sufficient quantity” of sales to the general public depends on the circumstances in each case, but must be more than mere token sales.

(4 If a material supplier, ~~~~~tdactum, or carrier undert&cs to perform a part of a construction contract as a subcontractor, its laborem and me&a&s employed at the site of the work would be subject to DBRA in the same manner as those employed by any other contractor or subcontractor. Employees of a material supplier who are required to perform more than an incidental amount of construction work in any w/w at the site of work would be covered by the DBRA and due the applicable wage rate for the classification of work performed. This would include warrantv and/or renair work For example, if an employee of a supplier of precast concrete items is required to go to the project site to repair and clean such items and in so doing performs more than an incidental amount of construction activity on the contract, the individual would be subject to DBRk Similarly, an employee of an equipment rental dealer or tire repair company who performs on-site repair work on leased equipment is subject to DBRA if the employee performs more than an incidental amount of work on site. For enforcement purposes, if such an employee spends more than 20% of his/her time in a workweek engaged in such activities on the site, he/she is DBRA covered for all time spent on the site during that wortik.

(d) Reg 52(l) specifically excluder from the definition of ‘site of the work” permanent fabrication plants, batch plants, borrow pits, job headquarters, tool yards, etc., of a commercial supplier or materialman which are established by a supplier of materials for the project before ouenine of && and are near to but not on the actual project site, even where such operations for a neriod of time mav he dedicated exclusivelv. or nearlv so, to the performance of a contract. (see FOH 1%04(b) and Reg 53(l).)

15e16 Owner-onerators of trucks and other hauline eouioment.

As a matter of administrative policy, the provisions of DBRAEWHSSA are not applied to bona fide owneroperators of trucks who are independent contractors. For purposes of these Acts, the ccrtiW payrolls including the names of such owner-operators need not show hours worked nor rates allegedly paid, but only the notation “Owner-operator”. This position does not pertain to owner-operators of other equipment such a bulldozers, scrapers, backhoes, cranes, drilling rigs, welding machines, and the like. Moreover, employees hired by owner-operators are subject to DBFW in the usual manner.

lSe17 Relatives.

There are no exceptions from coverage, on the basis of family relationship, for relatives who are performing the work of laborers or mechanics. They must be paid the prevaihng wage rate for the classification of work performed and included in the payroll records.

1598 Renairnren - tire renair comnanies and heaw eouinment dealers.

(see FOH 1%5(c).)

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sulvev crews.

Where surveying is performed immediateIy prior to and during actual construction, in direct support of construction crews, such activity is covered by DBRA. Under the United States Housing Act of 1937 and the Housing Act of 1949, the “development of the project” coverage test isbroader.andmayaIsocoverpreliminarysmveywork.

The determination as to whether certain members of su~ey crews are laborers or mechanics is a question of fact. Such a determination must take into account the actual duties performed. As a general matter, instrumentman or transitman, rodman, chainman, party chiet, etc., are not considered laborers or mechanics. However, a crew member who prima@ does manual work, for example, clearing brush, is a laborer and is covered for the time so spent.

Timekeeners.

Timekeepers who perform no manual labor on construction projects are not considered to be “laborers” or “mechanics” for purposes of DBRA However, if such workers perform other duties as Iaborers or mechanics, they must be paid the WD rate for the particular classification invohred for the time so spent.

Truck drivers.

Truck drivers employed by a construction prime contractor or subcontractor to transport materials or equipment to a DBRA project, or from a DBRA project to return mater@ to the contractor’s or subwntractor’s pIant or yard, are covered. Drivers employed by a prime contractor or subcontractor transporting materials or equipment born one DBRA project to another DBRA project are aIso covered, and the time so spent is compensable at the DBRA rate required to be paid on the latter project. Drivers employed by a prime or subcontractor transporting materials or equipment away from a DBRA project to another project of the contractor or subcontractor are also covered, even where the latter project is not subject to DBRA

Truck drivers engaged in hauling excavated material, debris, dirt, asphalt for recycling, etc., away from a DBRA-covered construction site are covered for the time spent loading at the site, transporting the material and unloading. AII truck drivers engaged in such activities are covered regardless of their employer’s status as a materiahnan or a construction contractor. It makes no dZerence whether or not an employer who is engaged in such activities pays for the materials being transported away from the wnstruction site. Such truck drivers are covered because they are engaged in activities which are required by the construction wntract.

In situations where truck drivers are employed by an independent wntractor or a bona fide materialman to haul material to a covered project from a non-covered supply source (e.g., sand or gravel pit, asphalt plant serving the public in general), such drivers would not be covered.

In situations where truck drivers are employed by an independent wntractor or a materiaiman to haul materials from covered suppiy sources (e.g., batch plants or borrow pits, stockpiles etc., which have been established to setve excIusiveIy, or nearly so, the covered project), such drivers would be covered for the time so spent.

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Tueboat omxaton. tumasters. caDtaiIlS and deckhands.

in general, tugboat personnel are considered to be men, engaged in navigational transportation, and are not considered to be laborers and mechanics. However, for example, if a crmvman on a dredging project is performing work dire& related to the covered amstruction project such as. connecting exteuding and controlling the pipeline through which dredged material is being pumped, the individual would be amsidered a laborer or mechanic for the time so spent and entitled to the applicable prevaibg wage rate. (Also see FOH lSjO0.)

Volunteers.

There are no exceptions to DBRA coverage for vohmteer labor unless an exception is specifically provided for in the particular D-B Related Act under which the project funds are derived. Furthermore, DOL does not have the authority to grant waivers for volunteer labor. (see FOH mol.)

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APPLICATTON OF PREVAILING WAGE AND FRINGE BENEFIT REQUBUMENTS

Contract clauses.

In any contract subject to the labor standards provisions of DBRA, the contracting agency is required. to include in the wntract the clauses set forth in Reg 5.5 relating to minimum wages, apprentices, trainees, withholdi.ng, payrolls and basic records, and liabilities and penalties for violations.

The labor standards clauses in Reg 5.5 included in a prime wntract are by their terms required to be included as well in any subcontract or any lower tier subcontract made thereunder. Contractors who subcontract by means of purchase orders or other informal type wntract forms will be considered in compliance with Reg 55 provided they attach copies of the applicable WD and labor standards clauses to the subcontract form.

(4 When the labor standards clauses are omitted from subcontracts in which they should have been included, and are not incorporated by reference in the subcontracts, the right of the subcontractor’s employees to receive compensation in accordance with the wage determination in the prime contact is not afbxted. XII such circumstances, since the subcontractor did not contract to pay the DBRA rates, the subcontractor would not generally be held responstble. However, the prime wntractor would be obligated to pay the subcontractor’s laborers and mechanics as required by the labor standards provisions of the prime contract.

1551 Prevailing waee rates and frinee benefits.

The D-B Act itself and the pre4ing wage provisions of the related Acts confer upon the S/L the authority to predetermine, as MW, those wage rates found to be prewaihng for wrrcsponding classes of laborers and mechanica employed on projects of a character similar to the contract work in the area where the work is to be performed. Bona fide fringe benefits are included within the meaning of the terms %ages”, “scale of wages”, “wage rates”, “minimum wages”, and “prevailing wages”, as used in the D-B Act. (see Reg 52 (p).)

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Waee determinations.

The term “wage determination” includes the original decision and any subsequent decisions modifying, superseding, wrrecting, or otherwise changing the provisions of the original decision.

General waee determinations.

General WDs are published in the Government Printing 05ce (GPO) document entitled “General Wage Determinations Issued Under the Davis-Bacon and Related Acts.” (see Appendix C of Reg Part 1.)

(cl Project waee determinations.

Project WDs are issued in response to specific requests from contracting agencies when there is no general WD (from the GPO document) applicable to the type of wnstruction in the geographical area for the project involved.

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Use and effectiveness of waee determinations.

General WDs contain no fixed expiration date. Once issued, they remain valid until modified, superseded, or canceled by publication of a notice in the Federal Register. They may be used by the contracting agency, without prior notification to DOL, in contracts to be performed within the specSed geographical area and for the types of construction designated in the WD.

Project WDs are effefxive for 180 calendar days from the date they are issued. If the contract for which a project WD is requested is not awarded within the 180 days before the WD expires, the contracting agency must request a new WD or obtain an extension of the expiration date from the Adrr~ A project WD is applicable only to the particular project for which it was initially requutcd, it may not be included by the contracting agency in any other construction contracts.

Modifications to general and project WDs, notice of which are published in the Federal Resister (for general WDs) or received (for project WDs) by the contracting agency less than 10 days before bid opening, but not after bid opening, are effective unless the agency finds there is not sufficient time to notify bidders of the change. (see Reg 1.6(c).)

In addition, Reg 1.6(c)(3)@) provides that if a contract to which a general WD has been applied is not awarded within 90 days after bid opening, any modification, notice of which is published in the Federal Register prior to contract award is effective, unless the agency obtains an extension of the 9Ckiay period from the Adm. Reg 1.6(e) provides that if a bid solicitation is found to contain a wrong WD, or if a WD is withdrawn as a result of a Wage Appeals Board decision, notification to the contracting agency of such a finding is effective immediately, provided notification is made prior to contract award. Further, Reg 1.6(f) provides a mechanism to require contracting agencic to utilize a WD after award if it is found that the agency failed to include any WD in a covered contract or used a WD which clearly does not apply to the contract. Reg 1.6(g) contains guidelines for the application of WD’s in situations where Federal funding or assistance is not approved until after contract award (or after start of construction where there is no contract -N.

Project or general WD’s included in a contract are effective for the life of the contract.

Payrolls and renortine reouirements.

Payrolls and basic records relating thereto must be maintained and preserved as required by Reg 55(a)(3). Regs 33, 3.4, and 55(a)(3) contain the reporting requirements relative to submission of the weekly “Statement of Compliance” and payrolls to the contracting agency.

Area ~racticc - determining ~rotxr classification of various work and twx of construction.

Questions as to the proper classification for the work performed by a laborer or mechanic, or the proper type of construction (i.e., building, heavy, highway or residential) for work performed on a project with multiple wage schedules, are resohed by making an area practice survey. Such surveys, when necessary, are conducted under the guidance of the RO Wage Specialist.

The Wage Appeals Board ruled in FN Brothers &rn. (WAB Case No. %6,6/l4f77) that the pmptr classification of work performed by laborers and mechanics is that classification used by firms whose wage rates were found to be prevailing in the area and incorporated in the applicable WD.

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NOTE: For area practice survys involving building and residential construction wage schedules, it is first mcusary to determine from the RO WS whether DBFU projects were included in the survey data which formed the basis for the wage rates issued in the applicable WD in order to determine whether to include in the area practice sway any data from such federal DBRA projects.

The extent of the information required for making ares practice determinations will depend on the f&s in each case. If for example, in gathering preliminary data, all of the parties agree as to the proper classification, the area practice is thus established (i.e., a “limited” area practice survey). However, if all parties do not agree (i.e., jurisdictional dispute between two unions, or management does not agree with union), it will be neccssaTy to determine by a “full” area practice sutvey which classification actually performed the work in question on similar projects in the locality, normally the county, during the period one year prior to the start of construction of the DBRA project.

(c) How to conduct a limited area oractice survev to determine the nrouer classification of work.

(1) First, determine whether the applicable WD contains union negotiated rates or open shop (nonunion) rates, or whether it is a mixed schedule (e.g., union electricians and open shop laborers), for the classifications in question.

(2)

(3)

If the applicable WD reflects union rates for the classifications involved, the unions whose jurisdiction the work may he within should be contacted to determine whether the respective union performed the work in question on similar projects in the county in the period one year prior to the be ginning of construction of the project at issue. If so, each union should be asked how the individuals who performed that work were classified. If no union performed any of the work in question in the county in the period one year prior to the beginning of construction, the RO should be contacted for further guidance. In addition, the information provided by the unions should be confirmed with collective bargaining representatives of management (e.g., contractors’ associations such as local chapters of the Associated General Contractors of America, the Associated Builders and Contractors, the National Electrical Contractors Association, etc.). If all parties agree as to the proper classification for the work in question, the afta practice is established.

If the applicable WD reflects open shop rates for the classifications involved, open shop contractors should be contacted and asked whether they performed the work in question on similar projects in the county in the period one year prior to the beginning of construction of the project at issue. If so, these contractors should be asked how the employees who performed this work were classified. If all contractors agree, or if a clear majority of the contractors agree, the area practice is established. If no open shop contractor performed the work at issue in the county in the time period one year prior to the beginning of construction, the RO should be contacted for further guidance.

(4) If the applicable WD reflects a mixed schedule of rates, it is necessary to contact the unions and union and open shop contractors (and/or their associations) to determine who performed the work at issue on similar projects in the area in the period one year prior to the beginning of construction of the project. If all parties agree, or if a clear majority of the parties agree on the classification, the ares practice is established. The RO should he contacted if no work of the type at issue was performed in the county during the applicable time frame discusd above.

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(5) For any type of wage determination (whether based on union rates, open shop rates, or a mixed schedule), if the parties wntacted in the limited area practice sway do not agree (i.e., jurisdictional dispute between the unions, management does not agree with union, or disagreement between the open shop contractors) or if there is no clear majority in agreement, then it is newssary to conduct a full area txactice survey as set forth in (d) below to determine which classification actuahy performed the work in question on similar projects inthearea.

(d) How to conduct a full area nractice surwv to determine the DID= class&ation of work

(1)

(2)

(3)

(4)

(5)

In conjunction with the RO Wage Special& identify similar projects in the same geographical area as the project under investigation (usually the county) which were in progress during the period one year prior to the start of construction of the project under investigation. If no similar projects were built in the area during that time frame, wntact the RO for advice in expanding the survey in time (two or three years) and/or to contiguous wunties. The RO should contact the NO, if necessary.

Determine what 6.rms performed the work in question on those projects and contact those which are either open shop or union depending on the basis for the wage rates issued in the applicable wage determination.

From each firm contacted, determine the week in which the greatest number of employees performed the work in question on these projects (i.e., “peak week”) and determine how such employees were classified.

Compile all information received and total the number of employees in each classification which performed the work in question. The classification which has the clear majority of employees performing the work in question is the proper classification. However, if it is found that only 51% to 60% of the employees in a classification performed the work in question, contact the RO for further guidance. The RO should contact the NO, if

necessary. If no wmmon, single classification practice is found to be predominant in the area or if no project im&ing work of a similar character is found, we will not take cxwption to the contractor’s particular practices.

While the Dictionary of Occuoational Titles published by the Bureau of Labor Statistics may be used as reference material, it cannot be relied on for making employee classification determinations.

(e) How to conduct an area nractice sutvev to determine the orotter twx of wnstruction.

(1) All Agency Memorandum Nos. 130 and l31 give general, broad outlines of the proper categories of the various types of construction (building, heavy, highway and residential) subject to local or area practice”. For example, where a wntract for a project (such as a sewage treatment plant) contains multiple wage schedules (e.g., building g& heavy), it may be necessary to resort to area practice to determine which schedule of rates applies to the various parts of a project.

(2) The survey is conducted in essentially the same manner as described in 15fM(d), except that the task is to determine which rates were paid on similar projects for the type of work in dispute rather than which particular classification of laborer or mechanic performed a specific task. In conducting such a survey, all projects of a character similar are generally considered.

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However, in the case of either building or residential construction wage schedules, whether DBRA projects may be included in the area practice survey must first be determined from the RO WS. This will depend upon whether such DBRA projects were included in the wage survey which served as the basis for issuing the wage rates in the applicable WD. .

XX06 Dischareine MW and FB obligations under DBRk

A contractor or subcontractor performing work subject to a DBRA wage determination may discharge its h4W obligations for the payment of both straight time wages and fringe benefits by (1) paying both in cash, (2) making payments or incurring costs for “bona fide” Edge benefits, or, (3) by a combination thereof. Thus, under the DBRA (unlike SCA) a contractor may offset an amount of monetary wages paid in excess of the Mw required under the determination to satisfy its fringe benefit obligations. (see Reg 531.) This may be done, for example, in the following ways:

Basic Hourly Rate Health & Welfare Pension Total MW/FB Obligation

SlO.cKl 50

50 $11.00

(1) $11.00 in cash wages; (2) $10.00 plus $1.00 in pension contriiutions

or other “bona fide” fringe benefits; (3) S9.00+ plus $2.00 in pension contributions or

any combination of “bona fide” fringe benefits.

*Note - OT must be paid at time and one-half the w hourly rate of $10.00. (see Reg 532.)

15fO7 Salaried emnlovees.

In many cases salaried employees perform work on DBRA covered projects and noncovered projects in the same wh. To determine whether the employee has been properly paid for the time spent on the DBRA project, it is 6.tst necessary to determine the hourly rate of pay. For example, an employee who is working 40 hours per week and paid a salary of $200.00 per week would be paid at the rate of S!Xl per hour. If this same employee is entitled to a prevailing rate of $650 per hour for DBRA covered work, he or she would be entitled to an additional S150 per hour for work performed on the DBRA project. An employer may not arbitrarily allocate a grater portion of the employee’s salary to DBRA work in order to achieve compliance with the Act. It should be kept in mind that a nonexempt (i.e., Reg 541) salaried employee is only due the applicable DBRA rate for those hours actually spent performing laborers’ and mechanics’ duties. (see FOH lSe14(b).)

1Sfos Hourlv naid emolovees.

The same type of problem as discussed in FOH 15fo7 may be encountered with regard to hourly paid employees working on DBRA covered work and noncovered work in the same w/w. The contractor may not arbitrarily change the employee’s hourly wages to meet its DBRA obligations. For example, assume an employee’s regular rate of pay is SS.00 per hour and the prevailing wage under DBRA is S6.50 per hour. In a week in which both DBRA and noncovered work are

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performed, the employer cannot reduce the employee’s regular rate of pay of S5.00 per hour on nongovemment work to offset the higher rate required under DBRA This same principle applies where an employee performs work in more than one DBRA classification; an employee may be paid not less than the specified WD rate for each of the actual hours worked in each classification 0% Wa)U)(i)).

Piece rate er&Aovees.

In detemkbg whether piece rate employees have been properly paid under DBRA, it is necessaq to divide the total hours worked in the w/w into the total wages paid.

Creditine of fr&e benefit navments.

Reg 55(a)(l)(i) requires that contriiutions to fringe benefit plans made by a contractor or subcontractor must be made on a regular basis, i.e., not less often than quarterly.

Contributions made to a fringe benefit plan for Government work may not be used to fund the plan for periods of non-government work.

A contractor must make payments or incur costs in the amount specified in the applicable WD for each individual laborer or mechanic performing covered contract work. Where the cash wages paid and the per hour cost equivalents for fringe benefits together do not equal the prtiiing wage rate and fringe benefit amounts set forth in the applicable WD, the balance due must be paid in cash to each of the employees underpaid.

Contractors and subcontractors are required to pay fringe benefits for all DBRA covered work in the w/w. Unlike SCA, fringe benefits for D-B must be paid for both ST and OT hours. However, fringe benefit payments are not included in the basic/regular rate of pay for CWHSSA OT purposes. (See also FOH l5kM.)

A contractor may take credit for contriiutions for any “bona fide” fringe benefits regardless of whether the particular benefit is listed on the applicable WD.

Fringe benefits must be “bona fide”. There is no difficulty in det ermining whether a particular fkinge benefit is “bona fide” in the ordinary case where the benefits are those common to the construction industry and which are paid direct& to the employees in cash or into a fund, plan or program. An exampie of the latter would be the types of benefits listed in the Act itself which arefundedunderatrustor insurance program. Contractors may take credit for contributions made under such conventional plans without requesting the approval of DOL under kg sJ(a)OW).

Where a particular fringe benefit or benefit plan is not of the conventional type described in the preceding paragraph (f), it will be msssary for the NO to examine the facts and circumstances involved to determine whether the fringe benefit or the plan is “bona fide” in accordance with the r@rements of the ACL This is particularly true with respect to unfunded plans, which are discussed in Reg 528. Contractors or subcontractors seeking credit under the Act for costs incurred for such plans must request specific permission from W-H under section 55(a)(l)(b).

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A contractor may not take credit for any benefit required by law, such as social security wM.ributions or workers compensation.

Generally W-H will make BW and fringe benefit payments directly to the underpaid employees. However, in some cases where violations occurred because the contractor failed to make the payments in the required amount to a bona fide fringe benefit plan, it may be appropriate to allow a contractor to direct payments to the fringe benefit plan on behalf of the underpaid employees. Such action should be considered only upon request of the contractor or the fringe benefit plan (if a third party), and payments should be made to the plan only when the folknving wnditions are met:

(1) The employets continued to be covered by the plan despite the contractor’s failure to make payments to the plan. The burden of proof to show that coverage wntinued rests with the contractor or representatives of the plan. W-H should verify the legitimacy of any claim made by the contractor or representative of the fringe benefit plan.

(2) The employees were aware of the fringe benefit plan and that their fringe benefit coverage was continuing during this period and any claims filed during this period (as in the case, for example, of a health insurance plan) were honored and paid.

(3) The contractor specifically authorizes W-H to make direct payments to the fringe benefit plan, or if an Au orders direct payments to the plan after a hearing in a RlT case.

(4) The full amount of all other violations (e.g., unpaid wages, vacations, holidays, etc.,) have been satisfied. In other words, ah vioM.ions involving direct payment to the employees have priority over payments to a fringe benefit plan.

If there is any doubt concerning the propriety of a plan’s claim, the question should be directed to the NO.

Situations may be encountered when employea have claimed credit for fringe benefit payments which in fact were never made. If a payment claimed by the employer cannot be verified through company records, the CO should wntact the insurance carrier or other third party recipient to determine if the payments were made.

Comnutine hourlv fiinee benefit eouivaients.

In determining cash equivalent credit for fringe beneftt payments, the period of time to be used is the period wvered by the wntriibution. For example, if an employer contributes to a hospitalization plan on a weekly basis, the total hours worked (DBRA covered and noncovered) each week by each employee should be divided into the contribution made by the employer on behalf of each employee to determine the hourly cash equivalent for which the employer is entitled to take credit for each employee. If wntriiutions are made biweekly, cash equivalents would be computed bi-weekly. If wntriiutions are made quarterly, cash equivalents would be computed quarterly, etc.

On occasion, a contractor or subcontractor may offset the annual cost of a particular fringe benefit by converting such costs to a hourly cash equivalent. For example, the hourly cash equivalent may be determined by dividing the cost of the fringe benefit by the total number of working hours (DBRA and noncovered) to which the cost is attributable. Total hours worked by employees must be used as a divisor to determine the rate of contribution per hour, since employees may work on both DBIU and nongovernment work during the year and employers are prohibited

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(c)

from using contributions made for nongovernment work to discharge or offset their obligations on DBRA work (see FOH lSflO(b)). Note, however, that if the amount of contribution varies per employee, credit must be determined separately for the amount contributed on behalf of each employee (FOH fifW4).

To illustrate the principles set out in (b), assume that the annual wst of a pension program is Sl5,ooO. The total actual working hours @BRA and nongovernment) are 15,000. Thus $15,000 / l5,OW hours = $1.00 per hour cash equivalent. Since wnstntction workers often do not work a full year (2,OfXl hours), where the contractor msltcr annual payments in advance to wver the coming year and actual hours worked will not be determinable until the close of that year, the total hours worked by the DBRA-wvered laborers, mechanics and apprentices, if any, for the preceding calendar year (or plan year), will be considered as representative of a normal work year for purposes of the above formula. Similarly, where the wmractor pays monthly health insurance premiums in advance on a lump sum basis, the total actual hours worked in the previous month or in the same month in the previous year may be use to determine (i.e., estimate) the hourly equivalent credit per employee during the current month. Any representative period may be utilied in such cases, provided that the period selected is reasonable. Where the cost incurred included wntriiutions for employees other than wvered laborers, mechanics, and apprentices, the hours of such nonwvered employees must be included in the computation of the hourly cash equivalent or the contributions for such employees must be eliminated prior to determining the cash equivalent for wvered employees.

(d) In computing cash equivalents, it should be kept in mind that under certain kinds of fringe benefit plans the rate of contribution for employees may vary. For example, under a hospitalization plan the employer often contributes at different rates for single and family plan members. In such situations, an employer cannot take an across the board average equivalent for all employees; rather, the cash equivalent can only be credited based on the rate of contributions for each individual employee.

lSfI.2 Elitribilitv standards for narticibation in frinee benefit olans.

Eligibility standards are permissible in an otherwise “bona fide” fringe benefit plan under DBRA However, an employer must make payments or incur costs in the applicable specified amounts with respect to each individual laborer or mechanic performing wvered contract work. Employees who are acluded from a plan for whatever reason and for whom the employer makes no contribution must be paid in cash. For example, many hospitalization plans require a waiting period of 30 days before an employee can participate in the plan. Since the employee normaliy makes no wntriiution for the employee during the waiting period, the employee must be paid the fringe benefit in cash or furnished other bona fide fringe benefits equal in monetary value. If the plan requires wntriiutions to be made during the eligibility waiting period, credit may be taken for such wntriiutions, since it is not required that all employees particinating in a bona fide fringe benefit plan be entitled to receive benefits from that plan at all times. However, credit may not be taken for wntriiutions for employees who by definition are not elimile to oarticinate, such as employees who are excluded because of age or part-time employment. Similarly, employers frequently make contributions to union fringe benefit funds for employees who are not members of the union. If the employee cannot participate in or receive benefits from the union fund, the employee must be paid the fringe benefits in cash, even though the employer, by the terms of his union contract, may be required to contribute to the union fringe benefit fund on behalf of such employees.

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Pension and urofit sharine nlans.

In order for a pension plan or a profit sharing plan providing for pension benefits to be creditable towards meeting the prevaibng wage requirements of DBRA, the wmributions must be irmvocably made to a trustee or a third party as set forth in Regs 526 and 5.27. In accordance with Reg 526, the trustees must assume the usual fiduciary responsibilities imposed upon trustees by applicable law. However, there is no prohibition against the contractor being a trustee of a plan.

As a general ntIe, contributions to profit sharing plans providing pension benefits may not be creditable towards meeting a contractor’s or subcontractor’s prevaihng wage obligation because of the uncertainty or discretionary nature of the contriiution provisions of the plan. Since by its Dature a profit sharing plan is only operative if there are profits, there is no guarantee that any wntriiutions will be made on behalf of an employee. In addition, since cont.riiutions under such plans are normally made on an annual basis, they fail to meet the requirement that plan wntriiutions be made not less often than quarterly. (Reg 5.5 (a)(l)(i)).

However, credit for profit sharing that funds pension benefit plans can be given if certain wnditions are met. The contractor would be required to wntriiute irrevocably to an escrow amunt not leas often than quarterly, during the period of the DBRA covered work, an amount sufficient to meet any claimed fringe benefit credit under DBRA for pensions on behalf of each employee participating in the plan. Upon the annual determination of profits, the monies placed in escrow are transferred to the pension trust fund and used as an off&et against the contractor’s obligation to employees under the profit sharing plan. Allowable credit under DBRA would be limited to the wntriiutions made which cover that portion of the total hours worked by the employees during the year which is attributable to work covered by DBRA Any shortfall in profits which results in actual payments to the pension plan being less than the rate at which the wntractor claimed DBRA credit throughout the year would have to be made up by the contractor when the account is settled at year end, by paying the difference (shortfall) in cash directly to the employees, or by making additional wntriiutions to the pension fund in an amount to cover the shortfall. A contractor cannot claim credit for more than the actual costs of or payments made into, the plan.

If a contractor’s pension or profit sharing plan providing for pension benefits does not meet the required standards of the FOH and Regs Part 5, and the contractor is willing to make the necessary changes to correct the plan, the contractor should be allowed to make the changes and no back wages should be charged. However, if the contractor does not correct the plan, back wages. should be charged.

“Vesting” is a usual provision of a pension plan which requires that an employee must work a specified period of time before he has earned the right to the pension benefits provided in the plan. It is W-H’s position that such provisions are permissible under the Act if they meet the requirements of the Employee Retirement Income Security Act (ERISA).

“Forfeitur& are fringe benefit monies which monies which have been wntriiuted on behalf of te&ted, nonvested participanu who have been terminated prior to having “vested” in the plan. Pension aml profit sharing plans normally contain provisions for the disposition of forfeitures. Such provisions provide that forfeitures are to be used to reduce a contractor’s future contributions or are allocated to the remaining employees’ accounts. In either case, such pr&siom are not prohibited under the Davis-Bacon Act. However, the contractor may not use such forfeitures as a credit toward meeting the requirements of an applicable Davis-Bacon wage determination. To do so would allow the wntractor to take double credit for the same wntriiutions.

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(g) (1) For defined contribution pension plans that provide for a higher hourly rate of contriiutions to be made for DBRA work for noncovered work, the higher rate paid for DBRA work will be fuUy credited oniy if the plan proves for immediate participation and immediate or essentially immediate vesting schedules (e.g., MI% vesting after -an employee work 500 or fewer hours). In addition, if the employer wishes the plan to qualify for tax exempt status, the amount of annual wntriiutions may not exceed a limitation imposed by the Internal Revenue Code of 25% of the employee’s annual compensation.

(2) For all defined benefit mnsion plans and defined contribution Dension clans which do not provide for immediate or essentiallv immediate vest+ schedules (100% vestinp after an cm~hccs work 500 or fewer hours), Davis-Bacon credit for contributions made to the plan is allowed based on the effective annual rate of wntributions for all hours worked during the year. In other words, if a contractor wishes to receive $2.00 per hour credit for a pension wntriibution, the contractor must wntriiute at this same rate for all hours worked during the year. If this is not done, the credit for DBR4 purposes would have to be revised accordingly.

(3) For example, assume that a firm’s wntribution for the pension benefit was computed to be $2,000.00 a year for a particular employee. If that employee worked 1,500 hours of the year on a DBRA covered project and 500 hours of the year on another job not covered by DBRA, only Sl$oo or $1.00 per hour would be creditable towards meeting the firms’s obligation to pay the prevaihng wage on the DBRA project This method for determining the allowable D-B credit for fringe benefit payments results &om the fact that employers are prohiiited from using contributions made for work covered by DBRA to fund the plan for periods of non-DBRA work.

l5fl4 Vacation and sick leave plans.

(4 It has been found that many vacation and sick leave plans in the construction industry are generally unfunded plans within the meaning of Reg 5.28 Reg 5.2S provides that an unfunded fringe benefit plan will be considered to be a bona fide plan for Davis-Bacon purposes if the plan 1) reasonably can he anticipated to provide benefits descrii in the D-B Act; 2) represents a commitment that can be legally enforced, 3) is carried out under a Cnancially responsrble plan or program; and 4) has been communicated in writing to the affected employees. When it is found that a contractor’s untimded plan does not meet these regulatory requirements, the firm may be required to establish an escrow account into which the contractor deposits weekly, or not less often than quarterly, the appropriate vacation and sick leave benefit wntriiutions. At the tune the employee takes vacation or sick leave the monies in such an account could be distributed and used as an off&t against the vacation and sick leave plan obligation of the wntractcu. However, if a contractor has paid vacation or sick leave “out of pocket” under an unfunded plan, credit must be given for such payments (see (d) below). The contractor should be advised to consult ERISA regarding possible additional requirements involving escrow accounts for the future.

(b) If an employee should terminate prior to bewming eligible under a vacation or sick leave plan, and amounts have been paid into an escrow account on such employee’s behalf for which the contractor has taken credit towards meeting its prevaihng wage obligations, then the employee must be paid those amounts from the escrow account upon termination.

(c) Situations may be encountered where unused vacation and/or sick leave is forfeited upon termination of employment. In such cases, the per hour wst of the vacation and/or sick leave credit must be computed on the basis of the total cost of the vacation and/or sick leave actually used by each employee (i.e., forfeited contributions for which the contractor has claimed credit

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under DBRA may not revert to the contractor). Of course, if the employer pays these accumulated benefits in cash upon termina tion by an employee, there will be no problem in determining the cash equivalent

In order to determine the DBRA credit for vacation and sick leave, the payments made by the contractor to each employee are divided by the hours worked in the period covered by the payments. Since both sick kaw and vacation are generally annual type fringe benefits, the total hours worked during the year (government and non-govemm ent) should be used as the divisor. For uample, let us assume an employee was paid $750.00 for vacation benefits and worked a total of 1500 hours for the employer during the year. The employer would be entitled to a credit of $50 per hour against the DBRA pmwailing wage ($750 / 1500 hours).

Holidav day.

The principles set forth in FOH 15fl4 regarding vacation and sick leave plans apply equally to holiday pay.

If an employee work any part of a week in which the holiday occurs, the employee must receive the entire holiday pay benefit, unless a different standard is provided in the applicable wage determination. (see (c) below.) However, if the employee is hired by the contractor after the holiday occurs in a particular week, he or she would not be entitled to the holiday benefit. For ezample, if New Year’s Day occurs on Tuesday, and the employee is hired on Thursday, the employee would not be entitled to the benefit.

Situations may be encountered where the wage determination requires the employee to work the day before the holiday and the day after. If it can be established that the employer arbitrarily lays off employees the day before and/or the day after the holiday to avoid payment of the holiday fringe benefit, back wages should be computed for failure to pay the holiday fringe benefit. By the same token, if it can be established that an employer transfers employees from a DBRA project to commercial work during a week in which holiday pay is due to avoid payment of the holiday pay, payment for the holiday should be requested. An indication of this type of violation may be a situation where the employer worked on the DBRA project the week before and the week after the holiday week.

Crediting sum-entice trainine costs.

Costs in& by a contractor or subcontractor for a “bona fide” apprenticeship program (i.e., a program registered with either a State apprentifeship agency recognized by BAT or the BAT itself) are creditable under DBRA. Only the actual costs incurred for the training program, such as instruction, book, and tools or materials, may be credited. Where the costs incurred exceed the amounts set forth in the applicable WD, the excess cost may be credited towards the contractor’s or subcontractor’s other prevailing wage obligations, but only to the extent of the actual a of the program.

me cost incurred for apprenticeship training for one classification of laborer or mechanic may not be used to offset costs required to be incurred for another classification. For example, a cOntractor cannot claim credit for apprenticeship training costs incurred for electricians to Satisfy

the applicable WD apprentice training requirements for carpenters.

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(c) Rather than wnttibuting to apprenticeship training funds on an hourly basis, some wntractors wntriiute a lump sum in artvance for the annual cost of the program. It is permissible for a wntractor to use such a method of payment and the contractor should be given appropriate u-edit. For example, a contractor may contribute a fee of $450 to enroll an employee in an apprentice training program for carpenters. In order to determine the amount the contractor may ofbet to meet this contribution, it is neassary to convert the contribution to an hourly cash equivaIent. The hourly cash equivalent would be determined by dividing the cost by the total number of hours worked b carpenters and carpenter apprentices @BRA and nongovernment work) to w&h the cost is attributable. Sina wnstruction workers often do not work a full year (2,,080 hours) the total hours worked by the contractor2 carpenters and carpenter apprentices, if any, for the preceding caIendar year will be wnsidered as representative of a normal work year for purposes of the above formula. The hourly cash equivalent thus obtained would be the wntractor’s permissible ofRet on DBRA covered work. In addition, the wntractor’s cast may not be offset over a period longer than the training period the cost was intended to cover. Thus, in this example, if the total hours worked by carpenters and carpenters’ apprentices were 45,000 hours in the preceding calendar year, the contractor .would be entitled to a credit of $0.01 per hour (S4SO / 4S,ooO) against the prevaihng wage obligations for all carpenters and carpenters’ apprentices working on the DBRA project.

lSfl7 Administrative exDenses - fringe benefit olans.

The administrative arpenses incurred by a contractor or subcontractor in connection with the administration of a “bona fide” fringe benefit plan are not creditable towards the prevailing wage under the Davis-Bacon Act. For example, a wntractor would not be able to take credit for the cost of an office employee who fIhs out medical insurance claim forms for submission to an insurana carrier.

lSfl8 Transrtortation and board and iodtine exnenses.

Where an employer sends empoyees who are regularly employed in their home community away from home to perform a special job at a location outside daily commuting distances from their homes so that, as a practical matter, they can return to their homes only on weekends, the assumption by the employer of the cost of the board and lodging at the distant location, not customarily furnished the empoyees in their regular employment by the employer, and of weekend transportation costs of returning to their homes and reporting again to the special job at the end of the weekend, are considered as payment of travel expenses properly reimbursable by the employer and incurred for its benefit. Such payments are not wnsidered bona fide fringe benefits within the meaning of the DBRA, are not part of the empoyees’ wages, and do not constitute board, lodging, or other facilities customarily furnished which are deductible from the predetermined wage pursuant to Regs 35(j).

lSfl9 OT pavtnents not reuuired bv DBRA.

No OT requirements are included in DBRA; OT payments to employees subject to the DBFU will depend on coverage under CWHSSA or FISA

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CONTRACT WORK HOURS AND SAFETY STANDARDS ACT - CWHSSA

Same of CWHSSA coverape - eeneral.

The scope of CWHSSA is set out in Sec. 103 of the Act The safety standards provisions are administered by OSHA Except as othenwise provided, the Act applies the maximum hours standards of 40 per week to any contract which mav reouire or involve the employment of laborers or mechanics upon a public work of the United States, any territory, or the District of Coiumbia, and to any other contract which may require or involve the employment of laborers or mechanics if such contract is one:

(1) to which the United States or any Agency or instrumentality thereof, or any territory, or the District of Columbia is a party; or

(2) which is made for or on behalf of the United States, any agency or instrumentality thereof, any territory, or the District of columbia; or

(3) which is a contract for work financed in whole or in part by loans or grants from, or loans insured or guaranteed by, the United States or any agency or instrumentality thereof, under anv statute of the United States nrovidine wage standards for such work (But see FOF lSiOO(l).)

Method of urocurement of contracts not controlling.

The CWHSSA is applicable to contracts regardless of the method of procurement. It is immaterial whether contracts are entered into through invitations for bids or by negotiation.

Failure to include CWHSSA stimulations in contract.

The failure to incorporate the CWHSSA stipulations, as set forth in Reg 55(b), into a contract does not preclude CWHSSA coverage.

Site of work.

The CWHSSA has no job site limitation as does the D-B Act. For example, if an employee performs part of the contract work under a construction contract at the job site and then continues contract work at a shop or other facility located at a remote distance, all the hours at both locations, including travel time between them (see FOH 15kO3), would be considered subject to CWHSSA

Statute of limitations.

The Portal-to-Portal Act does not apply to the Contract Work Hours and Safety Standards Act. Employee suits authorized by Sec. 104(b) of the CWHSSA may be subject to some other statute of citations such as the h4iller Act. However, wntracting agencies may withhold and transfer funds to the ComptrolIer General in order to pay unpaid workers without regard to any statute of limitations.

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15h INTERPRETATIONS - APPLICATION OF CWHSSA TO TYPES OF WORK AND coNTIwcrs

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Cixtcessionaire contracts.

Post exchanges are considered agencies of the United States for purposes of the CWHSSA The fact that individuals are supplying the funds in payment for services rendered does not preclude coverage. Thus, contracts between Past &changes and various concessionaires such as barber shops, photographic studios, snack bars, shops repairing shoes, radios, watches, TV sets and appliances, car washing tack, operators of officer clubs, and laundry and dry cleaning services, would be subject to CWHSSA

where the amount of contract other than a construction contract exceeds $2,500, the CWHSSA applies even though the percentage paid the Government has the effect of reducing the net amount retained by the contractor to a figure of $2,500 or less (for example, where the contractor pays a post exchange a percentage of the amount collected for cleaning etc, rather than receiving payment from the Government). (see also FOH 15iOO(7).)

(cl The application of the CWHSSA to concessionaire contracts extends to contracts under which setvices are provided to the public generally, and is not limited to those contracts under which services are provided to the Government or its civiban or military personnel. For example, all laborers or mechanics employed by concessionaires in national park, forests, and the National Wddlife Refuge System, are covered by CWHSSA

IShO Contracts with States and wlitical subdivisions.

In some cases, a State or political subdivision will obtain a Government contract and undertake to perform it with State or municipal employees. The CWHSSA does not contain an exemption for contracts performed by State or municipal employees. Thus, the CWHSSA will apply to nonconstruction contracts with States or political subdivisions in the same manner as the contracts with private employers, in the absence of administrative action under Sec. 105 of the Act varying such application. For the application of CWHSSA to “force account” construction work (that is, work performed “in-house” with Federal funds by empoyees of a Government agency or a State or political subdivision thereof), a FOH 13~05.

15h02 Food services.

Contracts to provide food services to employees in Federal Government buildings and installations, or the employees of firms which are managing Government facilities, are subject to CWHSSA Cook, waitresses, buspersons, and related jobs are considered laborers or mechanics covered by the CWHSSA

lshO3 Hotels, motels, and restaurants - contracts for lodtine and meals.

Contracts with hotels, motels, and restaurants for the furnishing of lodging and meals are generally subject to the CWHSSA Employees such as maids, porters, cook, dishwashers, wafters and counterworkers would generally be considered laborers or mechanics covered by CWHSSA

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15hO4 Janitorial service contracts.

Janitors and window cleaners performing work on a Federal Government contract for services are subject to the CWHSSA

lshO5 Laundrv and drv cleanine contracts: Linen sutmk contracts.

Tite CWHSSA applies to laborers or mechanics performing laundry and dry cleaning service contracts or linen supply amtracts.

lsho6 Maiitenance work done under service contracts with HUD.

Maintenance empoyeu as well as other workers engaged in manual setvices for local housing ‘authorities pursuan t to service contracts with HUD are subject to CWHSSA Contracts with the Federal Housing Administration (F’HA) for work on houses owned by the FHA (i.e., houses re~byFHAforfailureoftheborrower to meet payments), such as for mowing of yards, repair, and maintenance work, are also subject to CWHSSA

mm Movine and stotape.

Contracts which call for packing, crating drayage, loading, and storage of household goods and petsod effects of military and civihan personnel arrivingand departing from military installations are subject to the CWHSSA The primary purpose of such contracts in not considered to be for transportation within the meaning of the CWHSSA exemption. (see lSiCKI(2).

lShO3 Renair and setvicintr of vehicles.

Contracts for the repair and servicing of vehicles are generally subject to the CWHSSA and are not tempt therefrom under the open market exemption. (see FOH lSioO(4).)

15hO9 Shinbuildine. alteration. renair. and maintenance.

&cept where PCA is applicable, CWHSSA will apply to the building, alteration, repair, and maintenance of ships under Government contracts. m FOH 13bl1, 14dO3, lSdO8, and Sec. 7 of R&I No. 3.)

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Postal Se&e contracts for the handling of mail may be subject to CWHSSA if they mvolve the separation and storage of mail, as well as its transportation, according to specifications set forth in the contract. The principal question to be determined is whether the contract in question is a contact for transportation within the meaning of Sec. 103(b) of the CWHSSA If the contract is caseutialiy for sorting and storage of mail with transportation being incidental thereto, there would be coverage under CWHSSA (Also see FOH lSiOl(c).)

Vendine machine concession ameements.

‘J’he open market exemption under Sec. 103(b) of the CWHSSA does not include vending agreements. laborers or mechanics employed under such contracts are subject to CWHSSA U&S PCA covers such work

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15 EXCLUSIONS AND EXEMPTIONS UNDER CWHSSA

15iOO Exemntions.

Certain types of contracts and contract work are exempted from coverage of the Act, either by the terms of.the Act (Sec. 103(a) and (b)) or by administrative order issued by authority of the S/L under Sec. 105 of the Act. These in&de (the first five are statutory):

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work under a contract descrii in FOH lSgoo(3) where the assistance from the United States or any agency or instrumentaiity is & in that nature of a loan guarantee, or insurance (see FOH lSiOl(b));

contracts for transportation by land air, or water (this includes, for example, mail haul wntracts);

contracts for transmission of intehigence;

contracts for the purchase of supplies or materials or articles ord.ina@ aMilable in the open market;

& required to be done in accordance with the provisions of the Walsh-He&y Public Contracts Act,

construction contracts of $Z@XI or iess;

purchases and contracts other than construction in the aggregate amount of $2,500 or less. In arriving at the aggregate amount involved, there must be included all property and services which would properly be grouped together in a single transaction and which would be included in a single advertisement for bids if the procurement were being effected by formal advertising.

agreements entered into by or on behalf of the Gxnmodity Credit Corporation for storage in, or handling by, commercial warehouses of certain items, including grams, beaus, seeds, cotton, wool and naval stores;

certain sales of surpplus power by TVA; and

(10) contract work performed in a work place within a foreign country or certain other areas. This exemption follows Set 13 (n of the FLSA and its effect is to make the geocranhical scow of CWHSSA the same as the FL.%.

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1501 Annlication of exclusions and exemntions under CWHSSA

(a>

(b)

Sec. 103(a) (3) of the CWHSSA provides in part that the Act applies if the contract is “for work hamed in whole or in part by loans or grants from, or loans insured or guaranteed by, the United States or any agency or instrumentality thereof under any statute of the United States prcwidinp waee standards for such work...“. Thus, coverage on Federally assisted contracts does not exist unless the particular statute under which the loans or grants are authorized contains wage standards, directly or by reference. For example, contracts awarded as a result of a grant from the U.S. Department of Agriculture, Soil constrvation senrice, under P.L 566, known as the Wagershed Protection and Flood Prevention Act (16 USCA 1001, et seq.) are not covered by CWHSSA since the basic statute contains no reference to wage standards.

Set 103(a)(3) also provides that Sec. 102 of the Act (labor standards and wage and liquidated damages liabilities) shall not annly “to work where the assistance from the United States or any agency or instrumentality as set forth above is Qg!y in that nature of a loan guarantee, or insurance”. (Emphasis added.) This is a limited partial exemption from the application of CWHSSA wnflned to work assisted only in the quoted manner. It applies even though CWHSSA stipulations are written into the contract, but it does not affect DBRA application under the wage standards provided in the enabling statute. Particular attention should be paid to Department of Housing and Urban Development projects since the assistance for many of these projects is only in the nature of a loan guarantee, or insurance.

(c) With respect to contracts involving transportation, it is necessary to distinguish carefully as to whetter the wntract are primar@ for transportation purposes or whether the transportation is merely incidental to some other purpose of the contract. For example, mail haul contracts are fo. the primary purposes of transportation; hauling of materials by a contractor in connection with its wnstruction contract is an incident to the primary purpose of the contract which is wnstruction, not transportation.

(d) The “open market” exemption in CWHSSA is much broader than the exemption in PCA While in PCA the “open market” exemption is directed at the mode of purchase, in the CWHSSA the determination of whether a purchase is an “open market” one depends on the character of the produets or article purchased. If the wntract is for the purchase of materials in the form in which they are ordinarily made available to the general purchasing public, the CWHSSA “open market” exemption applies.

(4 Laborers or mechanics (including watchmen and guards) engaged in performance of government contracts for supplies that are not ord&rily available in the “open market” (see (d) above) are covered by CWHSSA if and to the extent that the work which they perform is not required to be done in acwrdance with the provisions of PCA. For example, if a contract for materials is more than $2,5Ml, but not in excess of $10,000, laborers or mechanics engaged in the wntract work may be subject to CWHSSA if no CWHSSA exemption applies; or, if a contract in excess of $10,000 is in part for setiws and in part for materials, a laborer or mechanic performing the services may be subject to CWHSSA, and another employee, engaged in producing the materials, may be subject only to PCA

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1502 Limited exemntions. vxiations, and tolerances.

(a) Under Sec. 105 of the Act, the Secretary or authorized representative, the Mm, may provide reasonable limitations and allow variations, tolerances, and exemptions to and from any or all of the provisions of the CWHSSA whenever such action is found to be necezzzq and proper in the public interest to prevent injustice, or undue hardship, or to avoid serious impairment of Government business. F&g 5.15 provides for consideration of any written request by any Federal agency for such action, and sets forth certain variations, tolerances, and exemptions which have been granted.

(b) In limited instances, punuant to Sec. 105, individual exemptions, variations, and tolerances under the CWHSSA have been granted to certain categories of workers on qnxified contracts. However, such workers are to be paid OT compensation as may be required by any other applicable law. If a contractor claims that an exemption from CWHSSA has been granted for a particular contract, the NO, which maintains files on the exemptions granted, should be contacted.

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INTERPRETATIONS - APPLKATION OF CWHSSA TO TYPES OF EhG’OYEES

EmDlovees covered: laborers and mechanics - statutorV definition.

Seaion 103(a) of the Act provides that its provisions apply to all laborers or mechanics, including watchmen and euards, employed by any contractor or subcontractor in the performance of any part of the contract work. The Act specifically provides that laborers and mechanics include workmen performing servia in connection with dredging or rock excavation in any river or harbor of the United States, or any territory, or the District of Columbia, but does not include any employee employed as a seaman. (see also FOH 15eOO and 15e22.)

Flight instructors.

Flight instructors may qualify for exemption as teachers under Reg 5413(a)(3) of the FISA if the requirements are met. (see FOH 22d19.) Such exempt fight instructors are not considered laborers or mechanics for purposes of CWHSA

The f&t that SCA may not apply to a particular flight training contract (see FOH 14&3(b)), or that flight instructors are not considered laborers or mechanics for purposes of the CWHSSA, does not affect the application of CWHSSA to other individuals employed as laborers or mechanics on such a contract in excess of SZ,SOO.

Medical and hosDita1 occunations.

Employees such as orderlies, porters, and maids are laborers and mechanics. However, those rendering professional services, and those whose work is clerical, supervisory, or nonmanual in nature, are not laborers or mechanics for purposes of CWHSSA

Pilots and wpilots of fixed-wine and rotarv-winp aircraft.

Pilots and copilots are laborers and mechanics within the meaning of the DBRA and the CWHSSA when they are performing in that capacity. The work of a pilot requires dexterity, coordination, a degree of physical strength, and other physical and mental processes necessary to control an airplane or rotorcraft in flight, and does not meet the primary duty requirement for exemption as a bona fide executive, administrative, or professional employee. (see Reg 5.15(d).)

Suuervisorv. txofessional. and clerical nersonnel.

The CWHSSA does not generally apply to supervisory, professional, and clerical personnel. (see also FOH 15e14.)

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APPLICATION OF OVERTIME STANDARDS UNDER CWHSSA

OT standards.

The CWHSSA provides OT pay standards of not leas than time and one-half the basic rate of pay for all hours worked in excess of forty in a w/w for laborets or mechanics employed on contracts subject to the Act. NOTE: Work performed prior to l/1186 on con&acts covered by CWHSSA is subject to time and one-half OT pay for all contract work hours in excess of 8 in a calendar day g 40 per week, whichever is m-eater. CWHSSA was amended by Public Law 99-145 effective l/b86 to eliminate the Qihr OT provisions.

Basic rate of nay.

The CWHSSA contains no h4W standards; h4W standards result from the application of DBRA pre%iiling wage rate determinations, SCA preva%ng wage rate determinations, or the FLSA MW. The “basic rate of pay” under the CWHSSA means the straight-time hourly rate. Under Reg 5.15(c)(l), it may be computed for OT purposes in the same manner as the FLEA regular rate as provided in IB 778 (taking the rules excluding fringe benefits payments into consideration). (see FOH lSkO6.)

“Calendar day”.

The term “calendar day” as used in the CWHSSA means the period from 1201 a.m. to midnight.

Hours worked.

The principles governing the determination of what constitutes warking time for purposes of the FLSA are followed in determinin g hours worked by laborers and mechanics performing work subject to CWHSSA However, the application of the OT provisions under the CWSHHA differs from the FLSA in that only the hours actually spent on a covered contract or combination of covered contracts need be considered in computing the OT pay.

In the case of an employee working for two or more employers, all hours worked under the same contract are to be counted for purposea of CWHSSA OT even though the employers are disassociated or othenvise separate, such as a contractor and a subcontractor.

An employee working for the same contractor on two or more separately awarded contracts subject to the CWHSSA is entitled to have the hours worked on all such covered contracts combined and to receive OT for all such hours worked in the w/w in excess of 40 in a week (or, in extxss of 8 hours in a calendar day on contract work performed prior to l/l/86, if ihe number of such hours exceeds the hours over 40.)

. When an employee performs two or more types of work for which different hourly rates are applicable (i.e., different classification, DBRA or SCA work which is all covered by CWHSSA or nonwvered work, etc.), the CWH!%A overtime premium is computed under FLSA principles (FOH 32bOS and 3h).

RN. 582 FIELD OPERATIONS HANDBOOK - 6R9190 15ko4 - lsko6

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Comoutation of OT when other oremium navments are invohred.

Collective bargaining agreements frequently provide an established basic or regular rate with an additional premium payment for employees performing hazardous, arduous, or dirty work Such premium payments are not creditable as premium OT work and must be included as part of the basic or regular rate in computing OT under the CWHS!3A in the same manner as under the FJSA On the other band, where the parties have agreed on premium rates for work qualifyins as OT under FISA 8ecs 7(e)@), (6). or (7) which are computed as a multiple of the contractual base rate specified by the agreement, the extra compensation paid for such OT which is in excess of the statutory “regular rate” may be credited, under Set 7(h) of the WA, toward the SO percent premium compensation for OT which is required by the Act’s provision for an OT rate of “not less than one and one-half times” the statutory “regular rate”. A like rule applies under the CWH!%A

For example. a collective bargaining agreement provides a “basic” rate of $6 an hour for a crane operator, with double time based on such rate for work in excess of 8 hours a day or 40 hours a week and a “premium” of $1 an hour for a crane with a boom length of over 275 feet. An operator of a crane with such a boom length who work 9 hours a day, 5 days a week is entitled to $345 for the week (240 for 40 hours at S6, plus $60 for 5 OT hours at $12, plus $45 for 45 hours long-boom premium of $1). If paid in accordance with such a contract the employee will receive all the pay required under the FLSA or the CWHSSA Under both Acts, the “regular rate” or “basic rate” is $7 an hour, which included the long-boom premium. An additional payment of not less than $350 an hour as extra compensation for weekly OT is required for 5 of the 45 hours worked. Thus, the statutory requirements are met by payment for 45 hours at $7 ($315) plus OT premiums of $1750 (5 x S350), or a total payment of $332.50. The premium portion of the collective bargaining contract double-time OT payment which is creditable ($60 - $35 = $25) toward the premium portion of the employee’s pay for OT at the time and one-half rate required by the statute is more than enough to satisfy the statutory OT pay requirement (5 x $3.50 = $1750).

Cemnutation of OT under CWHSSA when wage rate is hipher than that reuuired under DBRA SCA or

The wage rate actually paid an employee for non-OT work, when it exceeds the applicable DBRA or SCA MW rate, is the “basic rate” of pay on which not less than time and one-half for OT must be computed under CWHSSA (see Reg 532(c)(l) and (2) and FOH 32jOl.)

Computation of OT when ftinee benefits are involved.

Any SCA or D-B fringe benefit payments which are excudable from the regular rate under Sec. 7(e) of the FISA, or their cash eouivalent, may be excluded in the computation of the basic rate under CWHSSA, as provided in Reg 4.182 and Reg 532, respectively.

A question of fact may arise as to whether or not a cash payment made to laborers or mechanics to whom a DBRA wage determination is applicable is actually a cash equivalent made in lieu of fringe benefit or is simply part of the straight-time cash wage. ln the latter situation, the cash payment is not excludable in figuring OT compensation. (see Reg 532(c)(l).)

Rev. 582 FIELD OPERATIONS HANDBOOK - 6/29/90 lsko7 - 15klO

1!%07 FLEA OT nenmtions and CWHSSA.

An employee may perform work in a w/w within the scope of an FLSA OT exemption and also perform work covered by the CWHSSA In such cases, during any such w/w which the employee works more than 40 hours per week on contract work subiect to CWHSSA the employee must be paid additional half-time OT for all such contract hours in excess of 40 per week However, during any such w/w in which the employee does not work more than 40 hours on contract work subiect to CWHSSA, an otherwise applicable FLEA OT exemption will not be defeated.

15k0fI FLSA Sec. 7(fI DhS and CWHSSA

Art FLSA Sex 7(f) plan which is found to be valid may continue to operate during periods in which the work of an employee is subject to CWHSSA provided that during those periods the employee is paid in compliance with the OT provisions of CWHSSA

lSkQ9 Use of the fluctuatine whv under CHWSSA

An employer may compensate employees who are subject to the OT standards of CWHSSA on the basis of the fluctuating w/w method of payment provided: (1) the criteria set forth in IB 778.114 are met; (2) the employees’ regular rate of pay in any w/w does not fall below the applicable prevailing or minimum hourly rate required under the DBRA SCq and/or FLSA as applicable; and (3) additional half-time OT is paid for hours of work in excess of 40 per week.

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(a)

Comoutine liauidated damaees under CWHSSA

Sec.l02(b)(2) of the CWHSSA as amended by Public Law 99-145 (effective l&86), requires that “liquidated damages shall be computed, with respect to each individual employed as a laborer or mechanic in violation of any provision of this Act, in the sum of $10 for each calendar day on which such individual was required or permitted to work in excess of the standard workweek of 40 hours without payment of the overtime required by this Act.” Prior to its amendment l/M%, CWHSSA required OT pay at time and one-half for all contract work hours in excess of 8 in a calendar day or 40 in a w/w, depending upon which is greater in number. Thus, for contract work performed on or after l/l/86, the computation of liquidated damages is based solely upon weekly OT standards, and $10 is due for each calendar day on which each laborer or mechanic was required or permitted to work in excess of 40 hours without payment of time and one-half OT. (For example, if an employee worked six 11-hour days and was paid no OT, $30 in liquidated damages would be computed - $10 for each of three calendar days of the w/w on which hours over 4.0 were worked and not paid for at one and one-half OT rates.) With respect to contract work performed prior to l&86, the principles in paragraphs (b) and (c) below shall be followed for computing liquidated damages. Note that, in all cases, liquidated damages are also required to be computed in situations where an employee is paid overtime at an incorrect basic hourly rate of PY-

Rev. 582 FIELD OPERATIONS HANDBOOK - 6/29/?90 l&l0 -2

(b) When computing liquidated damages for contract work hours performed prior to l/U%, such damages must be computed consistent with the wage payment obligations in the Act. Thus, since the Act required prior to its amendment that a contractor or subcontractor pay either weekly or daiIy OT, depending upon which was most beneficial to the laborer or mechanic, liquidated damages shall be computed for work performed prior to l/l/86, to the extent that the contractor hiled to meet those obligations. These principles are best illustrated by the following examples where no OT was paid for contract work performed prior to vus6:

(c) If the daily OT hours equal or exceed the weekly OT hours, liquidated damages should be computed for the calendar days upon which dally OT is worked. On the other hand, if the weekly OT hours exceed the daily OT hours, liquidated damages should be computed for the days on which the weekly OT hours were wrked. Thus:

ExamDIe 1

ComDutation of Overtime

MTWTFS S m weekly OT 12342 12 12 (no OT paid)

00 ST 888 88 40 40

In the above example, where the daily OT hours equal the weekly OT hours, liquidated damages should be computed for the calendar days upon which daily OT is worked. In this case $50 in liquidated damages would be computed.

ExamDie 2

ComDutation of Overtime

MTWTFSS m week&

OT 234 2 11 3 (no OT paid) 000

ST 888 8 32 40

In this case, the daily OT czeeds the weekly OT so liquidated damages would be computed for Monday, Tuesday, Wednesday, and Thursday, or $40.

Rev.582 FIELD OPERATIONS HANDBOOK - 6/29/90 15klo -3

FQrnDlC 3

Commutation of Overtime

MTWTFS S m weekly

OT 245 1 3 15 23 (no OT paid) 0

ST 888 888 48 40

In the above example, liquidated damages would be computed for the weekly OT hours, because they exceed the daily OT hours. Weekly OT hours were worked on three calendar days, Thursday, Friday, and Saturday and thus $30 in liquidated damages would be computed.

In some cases, the contractor may pay weekly OT (after 40 or 42 or 44 hours per week) but not daily OT. If the daily OT hours in such cases equal or exceed the weekly OT hours, the weekly OT hours for which payment has been made may be used to offset the daily bouts g they accrue. On the other hand, if the weekly OT hours exceed the daily OT hours, liquidated damages should be computed for the days on which the weekly OT hours not paid for at time and one half were worked. The following examples will illustrate the application of this principle.

&amble 4

Comuutation of Overtime

MTWTFSS QailJ weekly

OT 311 5 2 (2 hours OT paid) 0 0

ST 888 85 37 40

In the above example the employer paid weekly OT after 40 hours per week thus, the 2 weekly OT hours paid for at time and one half will offset ouly 2 of the daily OT hours worked on Monday, still leaving Monday as an “OT day. Therefore, liquidated damages should be computed for Monday, Wednesday, and Thursday and would be $30.

Rev. 582 FIELD OPERATIONS HANDBOOK - 6/29/90 15klo -4

J?xamde 5

Commutation of Overtime

MTWTFSS

OT 11 3 5 2 (2 hours OT paid) 00

ST 888 58 37 40

In the above example the cmpbycr paid wetekly OT after 40 hours per week. Thus, the 2 weekly OT hours paid for at time and one half will o&et all the daily OT hours worked on Monday and Tuesday. Therefore, liquidated damages should be computed for Friday only and would be $10.

EcamDle 6

CommHation of Overtime

MTWTFS S

OT 3 4 4 0 0

ST 888 88

QailJ weekly

11 11 (7 hours OT paid)

40 40

In the above example, the contractor paid week& OT after 44 hours in the w/w. The 7 weekly OT hours paid for at time and one half will off&t the daily OT hours on Monday and Wednesday. Therefore, liquidated damages should be computed for Friday only, or $10.

ExamrAe 7

Comtmtation of Overtime

MTWTFS S Daih, weekly

OT 1 1 2 7 (3 hours OT paid) 5 0

ST 888 88

In this example, the contractor paid weekly OT after 44 hours in the w/w (3 hours at time and one-half). Weekly OT hours not paid for at time and one half occurred on Saturday only and thus $10 would be computed in damages.